[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Proposed Rules]
[Pages 40791-40808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19270]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[SIP No. MT-001-0007, MT 001-0008, MT-001-0009 and MT-001-0010; FRL-
6408-8]


Approval and Promulgation of Air Quality Implementation Plans; 
Montana; Billings/Laurel Sulfur Dioxide State Implementation Plan

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to partially approve, conditionally approve 
and partially disapprove the Billings/Laurel sulfur dioxide (SO2) State 
Implementation Plan (SIP) revisions submitted by the State of Montana 
in response to a SIP Call. EPA is also proposing a regulatory scheme 
for sanctions. The SIP revisions establish, and require seven sources 
to meet and monitor compliance with, emission limitations for SO2 
emissions in the Billings/Laurel area. The intended effect of this 
action is to make federally enforceable those provisions that EPA is 
proposing to approve, to conditionally approve those provisions that 
the State has committed to correct, to disapprove those provisions that 
are not approvable, and to establish the sequence of sanctions if EPA's 
proposed disapproval becomes a final action. EPA is taking this action 
under sections 110 and 179 of the Clean Air Act (Act).

DATES: Written comments must be received by August 27, 1999.

ADDRESSES: Mail written comments (in duplicate if possible) to Richard 
R. Long, Director, Air Program, Mailcode 8P-AR, Environmental 
Protection Agency (EPA), Region VIII, 999 18th Street, Suite 500, 
Denver, Colorado 80202.
    Docket: You can inspect the official docket concerning this action, 
docket #R8-99-01, at the Air Program Office, Environmental Protection 
Agency, Region VIII, 999 18th Street, Suite 500, Denver, Colorado 80202 
(call Laurie Ostrand to make an appointment at (303) 312-6437). You 
also can review materials concerning this action (although not the 
official docket) at EPA

[[Page 40792]]

Region VIII's Montana Office, Federal Building, 301 S. Park, Helena, 
Montana 59620 (call Betsy Wahl to make an appointment at (406) 441-
1130, ext. 234) and at the Parmly Billings Library, 510 N. Broadway, 
Billings, Montana (406) 657-8391. Note that the materials at EPA's 
Montana Office and the Parmly Billings Library may not be as complete 
as the official docket at EPA's Denver Office.

FOR FURTHER INFORMATION CONTACT: Laurie Ostrand, EPA, Region VIII, 
(303) 312-6437 or Dawn Tesorero, EPA, Region VIII, (303) 312-6883.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of EPA's Proposed Actions
II. EPA's Action on the State of Montana's Submittals

Definitions

Technical Support Document (TSD)

    A. Why Is EPA Proposing to Approve Parts of the State of 
Montana's Plan?
    1. Quarterly Data Recovery Rate (QDRR)
    2. Hydrogen Sulfide (H2S) Continuous Emission 
Monitoring Systems (CEMS) at Cenex
    3. Combined Emission Limitations
    4. Montana Sulphur & Chemical Company (MSCC) 30-Meter Stack
    5. Variable Emission Limitations
    6. Department Discretion
    7. Clarifying Interpretations
    B. Why Is EPA Proposing to Disapprove Parts of the State of 
Montana's Plan?
    1. Escape Clause
    2. MSCC Stack Height Credit and Emission Limitations on the 
Sulfur Recovery Unit (SRU) 100-Meter Stack
    3. Language in Exxon and MSCC's Stipulations Related to 
Incorporation of Earlier Stipulations and Apportionment of the 
Airshed
    4. MSCC Auxiliary Vent Stacks
    5. Attainment Demonstration
    6. Burning of Sour Water Stripper (SWS) Emissions in the Flare 
at Cenex and Exxon
    7. Reasonably Available Control Measures (RACM) including 
Reasonably Available Control Technology (RACT) and Reasonable 
Further Progress (RFP) at Cenex
    C. Why Is EPA Proposing to Conditionally Approve Parts of the 
State of Montana's Plan?
    1. YELP's Emission Limitations
    2. Exxon's Coker Carbon Monoxide (CO)-Boiler Emission Limitation
    3. Exxon's F-2 Crude/Vacuum Heater Stack Emission Limitations 
and Attendant Compliance Monitoring Methods
    4. Exxon's Fuel Gas Combustion Emission Limitations and 
Attendant Compliance Monitoring Method
    5. Cenex Sour Water Stripper (SWS)
    D. What Happens When EPA Approves Parts of the State of 
Montana's Plan?
    E. What Happens When EPA Disapproves Parts of the State of 
Montana's Plan?
III. Other Issues Pertaining to State Authority
    A. How Do the State-Only Provisions Affect EPA's Actions?
    B. How Does Montana's Environmental Audit Act Affect EPA's 
Actions?
IV. Other Rulemaking Actions
    A. How Does This Proposed Rulemaking Relate to EPA's SIP Call?
    B. Why Is EPA Proposing Sanctions?
V. Background
    A. What Is a State Implementation Plan (SIP)?
    B. What Are the Sulfur Dioxide (SO2) National Ambient Air 
Quality Standards (NAAQS)
    C. What Is the Regulatory History in Billings/Laurel, Montana
    D. Why Did EPA Call for a SIP Revision?
    E. What Did the State of Montana Submit in Response to EPA's SIP 
Call?
    F. What Sources Does the SIP Affect?
VI. Request for Public Comment
VII. Administrative Requirements
    A. Executive Order 12886
    B. Executive Order 12875
    C. Executive Order 13045
    D. Executive Order 13084
    E. Regulatory Flexibility
    F. Unfunded Mandates

I. Summary of EPA's Proposed Actions

    Apart from those provisions we are proposing to disapprove or 
conditionally approve (see discussions below), we are proposing to 
approve all other aspects of the Billings/Laurel SO2 SIP, which the 
State of Montana submitted in response to our SIP Call. See Background 
section V.D. We caution that if we were to find it too difficult to 
enforce certain variable (or pro-rated) emission limitations at several 
of the sources or if data were not available to determine the emission 
limitations on a regular basis, we would reconsider our approval. Also, 
if we were to determine that the State-only provisions, as implemented, 
appeared to limit or constrain or otherwise have a chilling effect on 
the Montana Department of Environmental Quality's (MDEQ's) enforcement 
of the SIP, we would reconsider our approval or take other appropriate 
action under the Act. Our reconsideration could occur under section 
110(k)(6) of the Act or we could complete another SIP Call under 
sections 110(a)(2)(H) and 110(k)(5) of the Act. We caution that if 
sources are subject to more stringent requirements under other 
provisions of the Act (e.g., section 111, part C, or SIP approved 
permit programs under part A), our approval of the SIP (including 
emission limitations and other requirements), would not excuse sources 
from meeting these other more stringent requirements. Also, our action 
on this SIP is not meant to imply any sort of applicability 
determination under other provisions of the Act (e.g., section 111, 
part C, or SIP approved permit programs under part A).
    We are proposing to disapprove the following provisions of the 
Billings/Laurel SO2 SIP:
     The escape clause (paragraph 22 in the Exxon and Montana 
Sulphur & Chemical Company (MSCC) stipulations and paragraph 20 in the 
Cenex, Conoco, Montana Power, Yellowstone Energy Limited Partnership 
(YELP), and Western Sugar stipulations).
     The MSCC stack height credit and emission limitations on 
the sulfur recovery unit (SRU) 100-meter stack (paragraph 1 of the 
Exxon stipulation, paragraphs 1 and 2 of the MSCC stipulation, and 
section 3(A)(1)(a) and (b) and 3(A)(3) of the MSCC exhibit 
1).
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    \1\ The SIP was submitted in the form of stipulations, exhibits 
and attachments for each source covered by the plan. The majority of 
the requirements are contained in the exhibits. Throughout this 
document when we refer to an exhibit, we mean the exhibit A to the 
stipulation for the specified source.
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     The emission limitation on MSCC's auxiliary vent stacks, 
section 3(A)(4) of MSCC's exhibit.
     The attainment demonstration because of the improper stack 
height credit and emission limitations at MSCC.
     The attainment demonstration for lack of flare emission 
limitations at Cenex, Conoco, Exxon, and MSCC.
     The attainment demonstration because of the proposed 
disapproval of the emission limitation for MSCC's auxiliary vent 
stacks.
     The Reasonably Available Control Measures (RACM) 
(including Reasonably Available Control Technology (RACT)) and 
Reasonable Further Progress (RFP) requirements for Cenex.
     The provisions that allow sour water stripper emissions to 
be burned in the flare at Cenex and Exxon (sections 3(E)(4) and 4(E) of 
Exxon's exhibit and sections 3(B)(2) and 4(D) of Cenex's exhibit, only 
as they apply to flares).
    We are proposing to conditionally approve the following provisions 
of the Billings/Laurel SO2 SIP based on the State of Montana's 
commitment to adopt and submit adequate compliance monitoring methods:
     YELP's emission limitations (in sections 3(A)(1) through 
(3) of YELP's exhibit).
     Exxon's coker carbon monoxide (CO)-boiler emission 
limitation (in section 3(B)(1) of Exxon's exhibit).
     Exxon's F-2 crude/vacuum heater stack emission limitations 
and attendant compliance monitoring methods (in sections 3(E)(4) and 
4(E) (only as they apply to the F-2 crude/vacuum heater stack), 
3(A)(2), 3(B)(3), and attachment 2, of Exxon's exhibit).

[[Page 40793]]

     Exxon's fuel gas combustion emission limitations and 
attendant compliance monitoring methods (in sections 3(A)(1), 3(B)(2), 
4(B), and 6(B)(3) of Exxon's exhibit).
     Cenex's combustion sources emission limitations and 
attendant compliance monitoring methods (in sections 3(B)(2) and 4(D) 
(only as they apply to the main crude heater), 3(A)(1)(d), 4(B), and 
attachment 2, of Cenex's exhibit).
    Finally, we are proposing that the regulatory scheme issued for 
sanctions generally, under 40 CFR 52.31, should also apply here if our 
proposed partial disapproval of the SIP becomes a final action or if 
EPA adopts final conditional approvals that later convert to 
disapprovals. We are also proposing to apply the sanction rule's 
provisions regarding the timing of sanctions to this action. We also 
ask for comment on whether we should impose sanctions under section 
110(m) of the Act so that they become effective immediately upon the 
effective date of our partial disapproval or of a conversion from 
conditional approval to disapproval, and on the geographic scope of 
such discretionary sanctions should the Agency decide to impose them.

II. EPA's Action on the State of Montana's Submittals

Definitions

    For the purpose of this document, we are giving meanings to certain 
words as follows:
    (a) The words EPA, we, us or our mean or refer to the United States 
Environmental Protection Agency.
    (b) The words State or Montana mean the State of Montana, unless 
the context indicates otherwise.

Technical Support Document (TSD)

    Our TSD for this action discusses our criteria for deciding whether 
to approve or disapprove the SIP and whether or not the State of 
Montana's submittals satisfy those criteria. The TSD also discusses 
most of the issues we raised on various drafts and final submittals of 
the Billings/Laurel SIP for SO2 and how the State of Montana addressed 
these issues. (See document #III.B-1.2)
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    \2\ All referenced documents are contained in the docket for 
this action, docket #R8-99-01.
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A. Why Is EPA Proposing To Approve Parts of the State of Montana's 
Plan?

    Apart from those provisions we are proposing to disapprove or 
conditionally approve (see discussions below), we are proposing to 
approve all other aspects of the SIP. We are proposing to approve these 
other aspects of the SIP because we believe they meet our SIP approval 
criteria and provide enforceable emission limitations on sources in the 
Billings/Laurel area. We caution that if we were to find it too 
difficult to enforce certain variable (or pro-rated) emission 
limitations at several of the sources or if data were not available to 
determine the emission limitations on a regular basis, we would 
reconsider our approval. Also, if we were to determine that the State-
only provisions, as implemented, appeared to limit or constrain or 
otherwise have a chilling effect on MDEQ's enforcement of the SIP, we 
would reconsider our approval or take other appropriate action under 
the Act. Our reconsideration could occur under section 110(k)(6) of the 
Act or we could complete another SIP Call under sections 110(a)(2)(H) 
and 110(k)(5) of the Act. Also, we caution that if sources are subject 
to more stringent requirements under other provisions of the Act (e.g., 
section 111, part C, or SIP approved permit programs under part A), our 
approval of the SIP (including emission limitations and other 
requirements), would not excuse sources from meeting these other more 
stringent requirements. Also, our approval of the SIP is not meant to 
imply any sort of applicability determination under other provisions of 
the Act (e.g., section 111, part C, or SIP approved permit programs 
under part A).
    We evaluated the SIP submittals against the following provisions in 
sections 110(a)(2) and 172(c) of the Act that SIPs are required to 
meet:
     Notice and public hearing.
     Enforceable emission limitations.
     Ambient air quality data.
     Enforcement program and stationary source regulations.
     Interference with any other state.
     Assurance of adequacy of personnel, funding, authority.
     Emission monitoring.
     Emergency powers.
     SIP revisions.
    Unless identified below in ``Why Is EPA Proposing to Disapprove or 
Conditionally Approve Parts of the State of Montana's Plan,'' all other 
requirements of sections 110(a)(2) and 172(c) have been met. We are 
proposing to approve the SIP as satisfying those requirements or 
finding that no action is required because certain provisions have 
previously been approved into the Montana SIP. Refer to our TSD for a 
detailed discussion of the Act's requirements, how they have been 
satisfied, and our proposed actions.
    Following is a discussion of the major issues we raised concerning 
the Billings/Laurel SIP for SO2 and how the State of Montana addressed 
those issues.
1. Quarterly Data Recovery Rate (QDRR)
    In earlier SIP submittals (i.e., those submitted prior to the July 
29, 1998 submittal), the exhibits required most sources to meet only a 
90% QDRR for the continuous emission monitoring system (CEMS), or 
limited the number of hours in a calendar quarter when valid hourly SO2 
emission rate data were unavailable to 192 hours. QDRR means the 
percentage of time in each quarter that the CEMS is up and running and 
generating data about SO2 emissions. We believed we could not propose 
to approve the SIP unless the State of Montana revised the exhibits to 
indicate that the exhibits do not preclude the MDEQ from taking 
enforcement action for a QDRR that is less than 100% but equal to or 
greater than 90%, and unless the State of Montana deleted the section 
of the exhibits pertaining to 192 hours. With the July 29, 1998 
submittal of the SIP, the State of Montana has revised the QDRR 
requirements as we requested. Specifically, the exhibits now indicate 
that notwithstanding the numerical QDRR requirements, sources are to 
use best efforts to achieve the highest QDRR that is technically 
feasible. The State of Montana deleted the reference to the 192-hour 
short quarters. Instead, the exhibits now indicate that, for quarters 
in which operating hours are reduced (short quarters), a determination 
of whether a source violated the QDRR shall include consideration of 
whether the reduced operating hours made compliance with the numerical 
QDRR unreasonable.
    The July 29, 1998 submittal of the SIP addresses our prior 
concerns. We interpret the submittal as requiring sources to achieve 
the highest data recovery that's technically feasible. Any loss of CEMS 
data will need to be adequately documented and justified by sources. We 
interpret the July 1998 submittal to allow the MDEQ, us, and citizens 
to take enforcement action for QDRR's that are between 90 and 100%, if 
CEMS data loss is not adequately documented and justified. We believe 
that the MDEQ shares our interpretation of the QDRR requirements. See 
transcripts of the June 12, 1998 hearing before the Board of 
Environmental Review, page 6, starting on line 14 where an MDEQ 
representative indicated ``[W]e have revised that control plan such 
[that] it is clear now that obtaining data 100 percent of the time is 
indeed a requirement of the control plan.'' These transcripts are part

[[Page 40794]]

of the ``Record of Adoption'' material that was submitted by the 
Governor with the SIP revision on July 29, 1998. (See document #II.E-
3.)
    Based on the July 1998 submittal and our interpretation above, we 
are proposing to approve the SIP as it applies to the QDRR provisions 
in all the exhibits for all seven sources.
2. Hydrogen Sulfide (H2S) Continuous Emission Monitoring Systems (CEMS) 
at Cenex
    H2S CEMS are used at some sources to monitor compliance with the 
SO2 emission limitations on fuel gas-fired units. H2S concentrations 
above 300 ppm would exceed the level at which the monitors could record 
(i.e., be off-scale) and would result in errors in estimating SO2 
emissions. We believed we could not propose to approve the SIP unless 
the State of Montana revised the earlier exhibits (i.e., those 
submitted prior to the July 29, 1998 submittal) to restrict the H2S 
concentration to a value that could be monitored by the H2S CEMS. We 
believed the limitation must be established such that the CEMS used to 
monitor compliance with the limitation will meet the required 
performance specifications.
    In lieu of restricting H2S concentrations to a range the CEMS can 
record, the July 29, 1998 submittal of the SIP requires Cenex to use an 
alternative method to monitor compliance when the CEMS are off-scale.
    We believe the Cenex exhibit, submitted on July 29, 1998, provides 
an acceptable approach to determine H2S concentrations in the refinery 
fuel gas at Cenex. We are proposing to approve the SIP as it applies to 
Cenex's method for determining H2S in the refinery fuel gas.
3. Combined Emission Limitations
    Several sources have combined emission limitations for heaters and 
boilers. We believed we could not propose to approve the SIP as written 
unless these limitations were justified under our Economic Incentive 
Program (EIP) or Emissions Trading Policy Statement. In our June 3, 
1997 letter to MDEQ, we completed an evaluation of the stipulations in 
comparison with the discretionary EIP requirements contained in 40 CFR 
part 51, subpart U, which we promulgated on April 7, 1994 (59 FR 
16690). (See document #II.C-8.) We believed the stipulations and 
exhibits met the discretionary EIP requirements. However, since our 
initial evaluation of the combined emission limitations under the 
discretionary EIP, we have come to believe that the compliance 
monitoring method for Exxon's refinery fuel-gas combustion emissions 
limitation (combined emission limitation) is not acceptable. See 
discussion below under section II.C.4., ``Exxon's fuel gas combustion 
emission limitations and attendant compliance monitoring method'' and 
in section III.C.(2)(d) of our TSD. In addition, we raised concerns 
with Cenex's method for measuring sour water stripper emissions when 
burned in the main crude heater. See discussion below under section 
II.C.5., ``Cenex Sour Water Stripper (SWS)'' and in section III.C(2)(l) 
of our TSD. The Governor has committed to address our concerns. (See 
document #II.E-5.) Therefore, we are proposing to conditionally approve 
Exxon and Cenex's combined emission limitation and proposing to fully 
approve the combined emission limitations for heaters and boilers at 
Conoco and Western Sugar as meeting the discretionary EIP requirements.
4. Montana Sulphur & Chemical Company (MSCC) 30-Meter Stack
    We believe the earlier version of the MSCC exhibit (i.e., the 
exhibit submitted prior to the July 29, 1998 submittal) did not provide 
an adequate means to monitor compliance with the 30-meter stack 
emission limitation. With the July 29, 1998 submittal of the SIP, the 
MSCC exhibit now restricts the units that can exhaust to the SRU 30-
meter stack. Specifically, MSCC's exhibit requires that only units 
burning low sulfur fuel gas or natural gas and only those units/boilers 
listed in MSCC's exhibit can be exhausted through the SRU 30-meter 
stack. MSCC's exhibit also provides that other units/boilers could be 
vented to the SRU 30-meter stack only if (1) they are ``like-kind'' 
boilers or simply replace the fuel burning potential of the listed 
boilers; (2) MSCC obtains the necessary permits or a determination by 
the MDEQ that a permit isn't necessary and the additional unit is fired 
exclusively on pipeline-quality natural gas, ``LP'' gas, or the 
equivalent in pounds of sulfur per BTU; or (3) the SO2 emissions from 
the SRU 30-meter stack are being monitored by parametric methods 
approved by the MDEQ and EPA, or by a CEMS. We confirmed with the MDEQ 
that the expression `` `like-kind' boilers or simply replaces the fuel 
burning potential of the listed boilers'' means that any replacement 
boiler must have the same or lower potential to emit SO2 as the boiler 
being replaced. A boiler having a greater potential to emit SO2 than an 
existing boiler could not be used to replace it.
    MSCC's exhibit, contained in the July 1998 submittal of the SIP, 
does not provide any new means to determine compliance with the 12 lb/
3-hr SO2 emission limitation for the SRU 30-meter stack. MSCC's exhibit 
requires MSCC to report the date and time period when emissions are 
exhausted through the SRU 30-meter stack, report which operating units 
are exhausted from the stack, and include engineering estimates of 
three-hour emissions and daily emissions from the stack.
    MSCC's exhibit requires that only units burning low sulfur fuel gas 
or natural gas be exhausted through the 30-meter stack. MSCC's exhibit 
does not define ``low sulfur fuel gas.'' We interpret ``low sulfur fuel 
gas'' to be properly sweetened fuel gas. Based on our interpretation, 
burning unsweetened refinery fuel gas in one of the named units when it 
is exhausting to the 30-meter stack would be considered a violation of 
the stipulation and SIP. MDEQ's September 3, 1998 letter indicates that 
MDEQ believes MSCC does not need further emissions monitoring for the 
30-meter stack because, among other reasons, MSCC fires its boilers on 
the same sweetened refinery fuel gas that it provides to Exxon, and 
when the amine unit is working properly, the H2S concentration in the 
refinery fuel gas is less than 100 ppmv. We inferred from that 
discussion that MDEQ also interpreted ``low sulfur fuel gas'' to mean 
properly sweetened fuel gas. In a letter dated May 20, 1999, the MDEQ 
indicated that they interpret ``low sulfur fuel gas'' to be sweetened 
refinery fuel gas or its equivalent in pounds of sulfur dioxide per 
million British thermal units (lbs-SO2/MMBtu) of heat input. (See 
document #II.E-14.)
    Because of our interpretations discussed above and MDEQ's 
confirmation of our interpretation in the letter dated May 20, 1999, we 
are proposing to approve the SIP as it applies to the emission 
limitation for the 30-meter stack at MSCC. Note, however, that we are 
concerned that there is no definition of ``low sulfur fuel gas'' in 
MSCC's exhibit. We may consider creating such a definition when we 
complete a Federal implementation plan (FIP) to fill in the gaps for 
the SIP provisions that we are proposing to disapprove.
5. Variable Emission Limitations 3
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    \3\ We believe that the variable emission limitations are not a 
dispersion technique, as defined by 40 CFR 51.100(hh)(1), for the 
following reasons: First, the variable emission limitations are not 
based on atmospheric conditions or ambient concentrations of a 
pollutant, and are thus not dispersion techniques under 40 CFR 
51.100(hh)(1)(ii). Second, with respect to Montana Power and MSCC, 
the SO2 emissions for each source are limited to 5,000 tons per year 
or less. Therefore, 40 CFR 51.100(hh)(1)(iii) does not apply. See 40 
CFR 51.100(hh)(2)(v). With respect to Exxon, the emission limitation 
varies as throughput to the FCC unit varies. The variable emission 
limitation is based on historical source operations and stack data, 
not on manipulating process or exhaust gas parameters to increase 
final exhaust gas plume rise. Therefore, the variable emission 
limitation is not a dispersion technique as defined in 40 CFR 
51.100(hh) and thus is not prohibited by section 123 of the Act.
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    Novel Control Strategy. The State of Montana has adopted a novel 
control

[[Page 40795]]

strategy for three of the seven sources in the Billings/Laurel area. 
For MSCC and Montana Power, emission limitations vary depending on the 
``buoyancy flux'' of the SO2 gas plume as it exits the stack. Buoyancy 
flux is a function of gas flow rate and gas temperature in the stack, 
which vary within certain parameters. To determine the emission 
limitation on a real-time basis for each three-hour and twenty-four 
hour compliance period, MSCC and Montana Power rely on data from 
continuous flow-rate monitors and in-stack thermometers. For the fluid 
catalytic cracking (FCC) unit at Exxon, emission limitations vary 
depending on the feed rate to the FCC unit. To determine the emission 
limitation on a real-time basis for each three-hour and twenty-four 
hour compliance period, Exxon relies on data from a continuous feed 
rate meter. To determine whether a unit is meeting the particular 
emission limitation for the relevant time period, actual emissions of 
SO2 will be monitored by continuous emission monitors located in the 
stacks.
    This strategy is both complex and flexible. The strategy is 
complex, in that it is based on computer dispersion modeling involving 
many variables and it requires constant attention by plant operators 
not only to keep pollution within allowable limitations but also to 
determine what those limitations may be. The strategy is flexible, in 
that it allows sources to maximize emissions when favorable stack 
conditions enable the gas plume to rise and thus have less impact on 
ambient concentrations of SO2 near the ground. Our proposed approval of 
this novel strategy was carefully considered. It is based on MDEQ's 
assurances that the variable limitations can be enforced and that MDEQ 
has adequate resources to monitor compliance, including review of 
monitoring data.
    Our Initial Concern. Our initial concern about the concept of a 
variable emission limitation focused on MDEQ's ability to model and 
enforce the limitation. After consulting with other Regional Offices 
and EPA's Office of Air Quality Planning and Standards (OAQPS), we 
believe that, while technically more difficult, it is feasible to model 
all the inputs and determine whether or not the NAAQS can be attained 
with variable emission limitations. With respect to whether variable 
limitations can be enforced, we believe they can be because all the 
stacks with variable limitations have continuous emission monitoring 
systems (CEMS). CEMS provide MDEQ and us with the level of information 
necessary to make a compliance determination at all times. However, we 
realize that enforcing a variable emission limitation may be more 
difficult than enforcing a fixed emission limitation. Since the State 
of Montana wants to pursue this innovative strategy, we are willing to 
propose approval of the SIP as it applies to these provisions. However, 
as discussed below, if variable limitations were to prove too difficult 
for MDEQ or us to enforce, we would reconsider our approval. Our 
reconsideration could occur under section 110(k)(6) of the Act or we 
could complete another SIP Call under sections 110(a)(2)(H) and 
110(k)(5) of the Act or take other appropriate action under the Act.
    Our Follow-up Concern. Our follow-up concern about the variable 
emission limitations was how to determine the appropriate emission 
limitation if continuous monitors were not functioning (the variable 
emission limitations at MSCC and Montana Power are based on the stack 
flow rate and temperature; at Exxon, on the FCC feed rate). We believed 
we could not propose to approve the SIP unless the State of Montana 
revised the exhibits to indicate that when data needed to determine the 
appropriate emission limitation are missing, the most stringent 
limitation applicable to the source would apply. Additionally, we 
indicated that for those variable limitations that rely on temperature 
probes, the MDEQ needed to provide assurances that they were adequate.
    To address our concerns about establishing emission limitations 
when data are missing, the State of Montana submitted a SIP revision on 
July 29, 1998. In the July 29, 1998 submittal, the exhibits require 
sources to install and maintain back-up monitoring systems. However, 
the back-up systems are not completely redundant. If the back-up system 
fails or fails to measure and record flow and temperature data, the 
exhibits specify a data substitution method to determine the applicable 
emission limitation.
    We believe that the back-up monitoring systems should assure that 
data are available to determine the emission limitations and only in 
rare cases should the data substitution method be needed to determine 
the appropriate emission limitation. However, if we were to find that 
the back-up monitoring systems were not functioning properly and not 
assuring on a regular basis that data were available to determine the 
emission limitations, we would reconsider our approval. Our 
reconsideration could occur under section 110(k)(6) of the Act or we 
could complete another SIP Call under sections 110(a)(2)(H) and 
110(k)(5) of the Act or take other appropriate action under the Act.
    In a letter dated May 20, 1999, MDEQ assured us that the 
temperature probes used to determine the buoyancy flux emission 
limitation are located in a representative location in the stack and 
that there are proper Quality Assurance/Quality Control (QA/QC) 
requirements for the temperature probes. (See document #II.E-14.)
    Our Proposed Approval. Because the State of Montana has addressed 
our concerns about determining emission limitations when CEMS data are 
not available, we are proposing to approve the SIP as it applies to the 
variable emission limitations at Montana Power and Exxon. We are not 
proposing to approve the SIP as it applies to the variable emission 
limitation at MSCC due to the stack height issue discussed in section 
II.B.(2) below and in section III.C.(2)(q) of our TSD. Our proposed 
approval for Montana Power and Exxon has several caveats. As mentioned 
previously, we realize that the variable emission limitations may be 
more difficult to enforce than a fixed emission limitation. We believe 
that the back-up monitoring methods should generally assure that data 
will be available to determine the emissions limitations. However, we 
will perform close oversight as MDEQ implements this SIP, particularly 
the variable emission limitation control strategy. If we were to find 
that the variable limitations are not practically enforceable by the 
MDEQ or us, that the back-up monitoring systems are not sufficient to 
assure on a regular basis that data are available to determine the 
emission limitations, or that MDEQ is unable to adequately review and 
assure the quality of the monitoring data on which both limitations and 
compliance are based, we would reconsider our approval. Our 
reconsideration could occur under section 110(k)(6) of the Act or we 
could complete another SIP Call under sections 110(a)(2)(H) and 
110(k)(5) of

[[Page 40796]]

the Act or take other appropriate action under the Act.
6. Department Discretion
    In our June 3, 1997 letter to MDEQ (see document #II.C-8), we 
raised a concern about places in the stipulations, exhibits and 
attachments where the Department has the discretion to modify existing 
provisions in the SIP, approve into the SIP future documents or 
compliance monitoring methods, or make other determinations that affect 
the SIP without obtaining our approval. The stipulations, exhibits and 
attachments were not clear whether any of these changes would be 
submitted as SIP revisions or through any other process for us to 
review and approve. We indicated that certain revisions to the SIP 
could occur through the Title V significant permit modification process 
if the SIP contained enabling language that would allow it to be 
revised through that process. We referenced our March 5, 1996 ``White 
Paper Number 2 for Improved Implementation of the Part 70 Operating 
Permits Program'' as guidance the State of Montana should follow when 
using the Title V permit process to revise the SIP.
    Finally, we indicated that in places where the stipulations, 
attachments and exhibits allowed the Department to make certain 
decisions, the words ``and EPA,'' must be added.
    In our March 6, 1998 letter to MDEQ (see document #II.C-10), we 
provided further guidance on how the stipulations, exhibits and 
attachments must be revised to address the department discretion 
concerns.
    With the July 29, 1998 submittal of the SIP, the State of Montana 
has revised the stipulations, exhibits and attachments to address our 
concerns. The stipulations describe a process that the State of Montana 
will follow when modifying the SIP by implementing alternative 
requirements or making text changes to the stipulations, exhibits and 
attachments.
    We believe that the July 1998 submittal addresses our concern about 
department discretion to change the SIP. The stipulations contain the 
following language: ``To the extent allowed under federal requirements, 
minor and clerical corrections may be made by mutual agreement of the 
parties, without the necessity for formal approval by EPA.'' We want to 
make clear that, once we approve the SIP, the federally approved SIP 
may only be revised with our approval. See section 110(i) of the Act, 
42 U.S.C. 7410(i). The one exception is through the Title V permitting 
process consistent with EPA's March 5, 1996 ``White Paper Number 2 for 
Improved Implementation of the part 70 Operating Permits Program.'' 
Thus, in proposing approval of portions of the SIP, we want to clarify 
that the ``parties'' to the stipulations may not make minor and 
clerical corrections to the federally effective SIP without our 
approval, or without following the Title V procedures described below.
    Consistent with the foregoing, we interpret the stipulations to 
require the following process for modifying the SIP text and approving 
alternative requirements and methodologies: the State of Montana must 
submit to us all modifications to SIP text (including minor and 
clerical corrections or modifications) and all MDEQ approvals of 
alternative requirements and methodologies. If the modification to text 
or alternative requirement or methodology is proposed as a ``minor 
modification'' (or clerical correction) we will inform the State of 
Montana within 45 days from the date of submittal of our determination 
whether the modification or alternative is major or minor, and if it is 
minor, of our approval of the modification or alternative. (We caution 
that our failure to make such determination within 45 days does not 
mean that the modification or alternative is minor and is approved.) If 
we do not approve the modification of text or alternative requirement 
or methodology as minor, the State of Montana must adopt the 
modification as a SIP revision in accordance with section 110(a)(2) of 
the Act and submit it to us for approval. We will then act on the SIP 
revision in accordance with the provisions of Title I of the Act, 
pursuant to notice and comment rulemaking under the Administrative 
Procedure Act.
    The stipulations provide for the possible use of Title V permit 
revision procedures to achieve certain types of SIP text modifications 
or approvals of alternative requirements or methodologies. 
Specifically, the modification or approval must pertain to testing, 
monitoring, recordkeeping, calculation, reporting, or operating 
requirements or methodologies. 40 CFR 70.6(a)(1)(iii) provides that the 
State of Montana may use Title V significant permit revision procedures 
to achieve the SIP revision if the following conditions have been met: 
the MDEQ has issued a Title V permit to the source, the State of 
Montana has adopted enabling regulatory language for making SIP changes 
through Title V procedures, we have approved such language in the 
Montana SIP, and we do not object to the specific modification at 
issue. In our March 5, 1996 ``White Paper Number 2 for Improved 
Implementation of the Part 70 Operating Permits Program,'' we have 
described various criteria for such enabling regulatory language; in 
particular, such SIP language must require that any alternative SIP 
requirements established through a Title V permit be at least as 
stringent as the otherwise-applicable SIP requirement.
    All changes to the SIP, whether minor or significant, must be 
reflected in the Title V permit for the source as ``applicable 
requirements'' under 40 CFR 70.2. Therefore, as changes are made to the 
SIP, MDEQ will need to modify the Title V permit through appropriate 
permit revision procedures.
    Based on the July 1998 submittal of the SIP and our interpretation 
of the modification process, we are proposing to approve these 
provisions of the stipulations, exhibits and attachments.
7. Clarifying Interpretations
    In a June 5, 1998 letter to MDEQ (see document #II.E-7), we 
identified several places where the State of Montana could make the 
stipulations and exhibits clearer. In a September 3, 1998 letter to us 
(see document II.E-9), the MDEQ agreed that, while it would be helpful 
to make the suggested changes, the stipulations had already been signed 
without the modifications we suggested. In the future the MDEQ will 
evaluate whether to make the suggested changes.
    Because the SIP has not been modified as we had suggested in our 
June 5, 1998 letter to the MDEQ, we are providing our interpretations 
of several provisions in the stipulations. Based on the MDEQ's 
September 3, 1998 letter, we believe that the MDEQ agrees with our 
interpretations.
    (a) Paragraph 16 of the Exxon and Montana Sulphur & Chemical 
Company (MSCC) stipulations and paragraph 14 of the other sources' 
stipulations contain this statement: ``The Stipulation Requirements 
shall supersede any less stringent corresponding conditions pertaining 
to SO2 sources in any currently existing permit.'' The term 
``Stipulation Requirements'' was defined and used in several places in 
prior versions of the stipulations. It appears to have been replaced by 
the phrase, ``requirements in the Stipulation, Exhibit A, and 
Attachments,'' everywhere in the current stipulations except in 
paragraph 16 for Exxon and MSCC and paragraph 14 for the other sources. 
Additionally, paragraph (B) of section 9 of exhibit A appears to define 
``Stipulation Requirements'' as a ``limitation, condition, or other 
requirement contained herein.'' Therefore, we interpret ``Stipulation 
Requirements'' in

[[Page 40797]]

paragraph 16 for Exxon and MSCC and paragraph 14 for the other sources 
to mean any ``requirement in the Stipulation, Exhibit A, and 
Attachments.''
    (b) Paragraph 12 of the Exxon and MSCC stipulations and paragraph 
10 of the other sources' stipulations use the word ``revision'' to 
describe a change made to an attachment. We understand that changes to 
attachments, like all other changes to SIP documents, are subject to 
the procedures for modification set forth in Paragraph 19 of the Exxon 
and MSCC stipulations and paragraph 17 of the other sources' 
stipulations.
    (c) In Montana Power's exhibit, we interpret the reporting 
requirements of section 7(B)(1)(f), which read, ``The electronic report 
shall contain daily calibration data from the CEMS required by section 
6(B)(1) and (2), or if applicable, section 6(B)(3),'' to mean, ``The 
electronic report shall contain daily calibration data from CEMS 
required by section 6(B)(1) and (2), and if applicable, section 
6(B)(3).''
    In addition to (a), (b) and (c) above, in a January 15, 1999 letter 
to MDEQ, we requested that the MDEQ confirm our interpretations on 
several issues. (See document #II.E-10.) The MDEQ responded on May 20, 
1999. (See document #II.E-14.) These issues are discussed below.
    (d) We interpret the February 7, 1998 date in section 3(E)(3) of 
Exxon's exhibit to be February 7, 1997. This paragraph is referencing 
an order signed by the Montana Board of Environmental Review (MBER). 
Earlier information submitted by MDEQ indicates that the order 
referenced was dated February 7, 1997. We believe the February 7, 1998 
date to be a typographical error. MDEQ confirmed this in its May 20, 
1999 letter.
    (e) We interpreted a parenthetical in section 3(A)(1) of the Exxon 
exhibit to mean that Exxon is prohibited from exhausting coker unit 
flue gas from the coker CO-boiler stack at the same time either or both 
of YELP's boilers are operating (except during startup and shutdown of 
YELP).4 This prohibition does not appear in the exhibit, 
however, but in an air quality permit issued to Exxon by MDEQ on June 
17, 1996, which states: ``Exxon shall, any time the Yellowstone Energy 
Limited Partnership (YELP) facility is operating, send all of its coker 
process gas to either or both of YELP's boilers. During startup and 
shutdown conditions at YELP, Exxon shall supply the maximum amount of 
coker process gas that YELP can accept'' (see document #II.F-12, 
paragraph A of Section II: Limitations and Conditions). We asked MDEQ 
to clarify this prohibition.
---------------------------------------------------------------------------

    \4\ The parenthetical states, ``(fuel gas combustion emissions 
only since under this configuration coker unit flue gas is 
prohibited from exhausting through the stack)''.
---------------------------------------------------------------------------

    In the May 20, 1999 letter to us, MDEQ responded that ``pursuant to 
the attainment demonstration modeling it is not necessary to prohibit 
coker unit flue gases from being exhausted from the coker CO-boiler 
stack at the same time that YELP is operating. The prohibition against 
simultaneous emissions was developed during prevention of significant 
deterioration of air quality (PSD) permitting of the YELP facility, and 
was necessary to obtain offsets allowing YELP into the airshed under 
PSD. Since the prohibition is not necessary for attainment of the 
NAAQS, it is the Department's position that the prohibition does not 
belong in Exxon's exhibit A, and the parenthetical should be deleted.''
    Because simultaneous emission from Exxon and YELP have been shown 
by modeling to demonstrate attainment of the NAAQS, we agree with the 
MDEQ that the prohibition in the parenthetical is not necessary for the 
Billings/Laurel SO2 SIP. However, if Exxon is subject to more stringent 
requirements under other provisions of the Act, such as the permit 
condition quoted above which appears in a permit issued under Montana's 
state-wide SIP, then our approval of this SIP would not excuse Exxon 
from meeting those other more stringent requirements.
    (f) MSCC's exhibit indicates that units burning low sulfur fuel gas 
or natural gas can be exhausted through the 30-meter stack. MSCC's 
exhibit does not define ``low sulfur fuel gas.'' We interpret ``low 
sulfur fuel gas'' to be properly sweetened fuel gas (e.g., fuel gas 
which has been treated in an amine unit to remove H2S). Based on our 
interpretation, burning unsweetened refinery fuel gas in one of the 
named units when it is exhausting to the 30-meter stack would be 
considered a violation of MSCC's exhibit and the SIP. The MDEQ's 
September 3, 1998, letter indicates that the Department believes MSCC 
does not need further emissions monitoring on the 30-meter stack 
because, among other reasons, MSCC fires its boilers on the same 
sweetened refinery fuel gas that it provides to Exxon and that when the 
amine unit is working properly, the H2S concentration in the refinery 
fuel gas is less than 100 ppmv. We inferred from that discussion that 
MDEQ also interpreted ``low sulfur fuel gas'' to mean properly 
sweetened fuel gas. In a letter dated May 20, 1999, the MDEQ indicated 
that they interpret ``low sulfur fuel gas'' to be sweetened refinery 
fuel gas or its equivalent in pounds of sulfur dioxide per million 
British thermal units (lbs-SO2/MMBtu) of heat input. (See document 
#II.E-14.) Note, however, that we are concerned that there is no 
definition of ``low sulfur fuel gas'' in MSCC's exhibit. We may 
consider creating such a definition when we complete a FIP to fill in 
the gaps for the SIP provisions that we are proposing to disapprove.
    (g) Finally, we interpret our approval of the SIP, including 
emission limitations and other requirements, as not excusing sources 
from meeting other potentially more stringent requirements under other 
provisions of the Act (e.g., section 111, part C or SIP-approved permit 
program under part A). In a conversation on April 28, 1999, the MDEQ 
agreed with our interpretation. Also, our action on this SIP is not 
meant to imply any sort of applicability determination under other 
provisions of the Act (e.g., section 111, part C or SIP-approved permit 
program under part A).

B. Why Is EPA Proposing to Disapprove Parts of the State of Montana's 
Plan?

    Certain provisions of the Billings/Laurel SO2 SIP do not satisfy 
our requirements for SIPS. In addition, the SIP lacks certain 
enforceable requirements necessary to demonstrate attainment and 
maintenance of the NAAQS. The parts of the Plan proposed for 
disapproval are the following:
1. Escape Clause
    Each stipulation contains a paragraph which allows a source to 
withdraw its consent to the stipulation. The ``escape clause'' reads as 
follows:

    Notwithstanding any other provision of this Stipulation, [the 
named source's] and the Department's consent to be bound by the 
terms of this Stipulation is conditioned upon the adoption of SO2 
emission control strategies, for all the affected industries in this 
matter, which are in their common terms substantially similar to one 
another. This condition of substantial similarity extends only to 
the initial control strategies, adopted by the Board or by the U.S. 
EPA as a Federal Implementation Plan, and which are adopted in 
response to the EPA letter of March 4, 1993 calling for revision of 
the Billings/Laurel SO2 SIP. This condition of substantial 
similarity does not extend to subsequent revisions of such initial 
emissions control strategies, but does extend to and include any 
revisions of such initial emissions control strategies resulting 
from any challenge or appeal of the initial adopted emissions 
control strategies. In the event that an initial control strategy is 
finally adopted by the Board or EPA, for any of the affected 
industries in this matter, which is not

[[Page 40798]]

substantially similar in its common terms to this Stipulation or 
Exhibit A, either [the named source] or the Department may, in 
writing delivered to the other party and to the other affected 
industries in this matter within 60 days of receiving written notice 
of the adoption, withdraw its consent to this Stipulation.

    We are proposing to disapprove the SIP as it applies to the escape 
clause because, if sources invoke the escape clause, the MDEQ would no 
longer have a plan to implement. Specifically, we are proposing to 
disapprove the following: paragraph 22 in the Exxon and MSCC 
stipulations; paragraph 20 in the Cenex, Conoco, Montana Power, YELP, 
and Western Sugar stipulations. If sources invoke the escape clause 
after our final action on the SIP, we expect to address this scenario 
by issuing another SIP Call under sections 110(a)(2)(H) and 110(k)(5) 
of the Act or taking other appropriate action under the Act. 
Additionally, if we disapprove the escape clause, the provisions of the 
SIP that we approve will remain federally enforceable even if one or 
more of the sources invoke the escape clause. While our proposed 
disapproval of the escape clause eliminates the risk of a source's 
future attempt to nullify the SIP, we do not believe our disapproval 
would render the SIP more stringent than the State of Montana intends, 
since it does not change the stringency of any of the substantive 
requirements the State of Montana has imposed and is currently able to 
enforce under the SIP.
2. MSCC Stack Height Credit and Emission Limitations on the Sulfur 
Recovery Unit (SRU) 100-Meter Stack
    We are proposing to disapprove MSCC's stack height credit and 
emission limitations (paragraph 2 of the MSCC stipulation and sections 
3(A)(1)(a) and (b) and 3(A)(3) of the MSCC exhibit) used in the 
attainment demonstration modeling for the Billings/Laurel area. We 
believe it is necessary to propose to disapprove MSCC's emission 
limitations because the State of Montana has set limits based on an 
amount of stack height credit for MSCC that is not supportable under 
section 123 of the Act or our stack height regulations.
(a) Introduction
    In enacting section 123 of the Act, Congress recognized that 
stationary sources could reduce local concentrations of pollutants in 
the air either through source controls or through the use of tall 
stacks to disperse the pollutants. Congress chose to restrict the 
extent to which sources could use dispersion as a means to meet the 
NAAQS, because Congress was concerned with the potential negative 
impacts on downwind areas associated with long-range transport of 
pollutants.
    To effect this restriction, Congress did not limit the height of 
stacks that sources may build, but instead limited the height that may 
be credited to stacks in dispersion modeling used to demonstrate 
attainment and maintenance of the NAAQS. Our regulations implement 
Congress's decision. By crediting too much of MSCC's stack height in 
the Billings attainment demonstration, the State of Montana is allowing 
MSCC to substitute dispersion for emissions reduction as a means to 
attain the SO2 NAAQS, in contravention of Congressional intent and our 
regulations.
(b) Stack Height Requirements
    Section 123 of the Act provides that the ``degree of emission 
limitation required for control of any air pollutant under an 
applicable implementation plan * * * shall not be affected in any 
manner by * * * so much of the stack height of any source as exceeds 
good engineering practice (as determined under regulations promulgated 
by the Administrator) * * * [G]ood engineering practice means, with 
respect to stack heights, the height necessary to insure that emissions 
from the stack do not result in excessive concentrations of any air 
pollutant in the immediate vicinity of the source as a result of 
atmospheric downwash, eddies and wakes which may be created by the 
source itself, nearby structures or nearby terrain obstacles * * *''
    Section 123 of the Act required us to promulgate regulations to 
carry out the purposes of section 123. We first promulgated stack 
height regulations in February 1982. These regulations were challenged 
in Sierra Club v. Environmental Protection Agency, 719 F.2d 436 (D.C. 
Cir. 1983). In that case, the U.S. Court of Appeals for the D. C. 
Circuit reversed certain provisions, upheld other provisions, and 
ordered us to reconsider still other provisions of the stack height 
regulations.
    We promulgated revised stack height regulations on July 8, 1985 (50 
FR 27892). These revised regulations were challenged in NRDC v. Thomas, 
838 F.2d 1224 (D.C. Cir. 1988). The court's opinion affirmed the 
regulations in large part. The court remanded three provisions that are 
not relevant to this action.
    Our stack height regulations, codified at 40 CFR 51.100 and 51.118, 
provide that the degree of emission limitation required for pollutant 
control under an applicable SIP shall not be affected by stack height 
in excess of good engineering practice (GEP) stack height. The central 
component of the regulations consists of a definition of the term 
``good engineering practice stack height.'' GEP stack height is the 
greater of (1) 65 meters (known as ``de minimis'' stack height), (2) 
the height calculated using a formula specified by the regulations 
(``formula height''), or (3) the height demonstrated using fluid 
modeling or a field study (``non-formula height'' or ``above-formula 
height''). 40 CFR 51.100(ii)(1)-(3).
    We issued our SIP Call to the State of Montana to revise the 
Billings/Laurel SIP in 1993. Following the SIP Call, MSCC constructed 
its 100 meter stack and sought to gain credit in the Billings/Laurel 
SIP for the full height of the stack.
    MSCC asserted various theories for gaining a 100 meter stack height 
credit. Among other things, MSCC argued that the 100 meter stack was 
grandfathered, that 100 meters represented the formula height based on 
the stack support structure, and that 100 meters represented the 
formula height based on nearby structures. The State of Montana 
rejected all of these arguments and they are therefore not relevant to 
this proposal.
    Ultimately, MSCC performed fluid modeling to attempt to justify an 
above-formula stack height credit. See CPP Report 95-1235, entitled 
``Fluid Modeling for Good Engineering Practice Stack Height for the 
Montana Sulphur and Chemical Company Main Stack (SRU),'' dated February 
22, 1996 (document # II.F-1). Our stack height regulations, at 40 CFR 
51.100(ii)(3), define GEP stack height for fluid modeling purposes as:

    The height demonstrated by a fluid model * * * approved by the 
EPA, State or local control agency, which ensures that the emissions 
from a stack do not result in excessive concentrations of any air 
pollutant as a result of atmospheric downwash, wakes, or eddy 
effects created by the source itself, nearby structures or nearby 
terrain features.

    The regulations, at 40 CFR 51.100(kk)(1), go on to define 
``excessive concentrations'' for purposes of above-formula fluid 
modeling demonstrations as follows:

    [A] maximum ground-level concentration due to emissions from a 
stack due in whole or part to downwash, wakes, and eddy effects 
produced by nearby structures or nearby terrain features which 
individually is at least 40 percent in excess of the maximum 
concentration experienced in the absence of such downwash, wakes, or 
eddy effects and which contributes to a total concentration due to 
emissions from all sources that is greater than an ambient air 
quality standard.


[[Page 40799]]


    The regulations further specify that, ``the allowable emission rate 
to be used in making demonstrations under this part shall be prescribed 
by the new source performance standard (NSPS) that is applicable to the 
source category unless the owner or operator demonstrates that this 
emission rate is infeasible.'' If the source successfully demonstrates 
that the applicable NSPS is infeasible, the regulations then provide 
that ``an alternative emission rate shall be established in 
consultation with the source owner or operator.'' 40 CFR 51.100(kk)(1). 
The preamble to the regulations indicates that such an alternative 
emission rate is to be established under our Best Available Retrofit 
Technology guidance. See 50 FR 27898, fn. 6, July 8, 1985. (See 
document #II.A-16.)
    We have consistently read the language of the regulations to 
require sources that wish to obtain above-formula stack height credit 
to actually adhere to the NSPS or alternative emission limit used in 
the fluid modeling demonstration. Sources must be well-controlled as a 
condition of obtaining above-formula stack height credit. See, e.g., 50 
FR 27898 (document #II.A-16); memorandum dated November 27, 1990 from 
John Calcagni to Irwin L. Dickstein regarding ``Stack Height 
Questions'' (document #II.F-13); letter dated April 20, 1989 from 
Gerald A. Emison to John P. Proctor (document #II.A-7); memorandum 
dated October 28, 1985 from Darryl D. Tyler, Director, Control Program 
Development Division, OAQPS, to Air Management Division Directors, 
Regions I-X, regarding ``Implementation of Stack Height Regulations--
Presumptive NSPS Emission Limit for Fluid Modeling Stacks Above Formula 
GEP Height'' (document #II.A-3); Response to Comments on the November 
9, 1984, Proposed Stack Height Rules, prepared July 1985 by EPA's 
Office of Air Quality Planning and Standards, at 29, 37, 61 (document 
#II.A-8); our Notice of denial of petitions for reconsideration of the 
stack height regulations, 51 FR 15885, at 15886 (document #II.A-9); 
Support Document for Response to Petitions for Reconsideration of the 
Stack Height Regulations, March 1986 (document #II.A-11); memorandum 
from Assistant Administrator for Air and Radiation to The Administrator 
regarding ``Denial of Petitions for Reconsideration of the Stack Height 
Regulations--Action Memorandum'' (document #II.A-10); Guideline for 
Determination of Good Engineering Practice Stack Height (Revised) 
(Technical Support Document For the Stack Height Regulations), EPA-450/
4-80-023R, June 1985, Table 3.1, item G (document #II.A-12); memorandum 
dated June 19, 1985 from Eric O. Ginsburg, Policy Development Section, 
OAQPS, to Files, entitled ``Conference Call With OMB to Discuss 
Concerns about the Stack Height Regulations,'' which was included in 
the docket for our stack height regulations (document #II.A-13); 
memorandum dated June 26, 1985 from D. H. Stonefield, Chief, Policy 
Development Section, OAQPS, to Docket A-83-49, entitled ``Stack Height 
Regulation Discussions OMB'' (document #II.A-14).
(c) MSCC's Fluid Modeling Analysis
    Based on MSCC's fluid modeling demonstration, the State of Montana 
adopted SO2 emission limitations 5 for MSCC's main stack 
based on a stack height credit of 97.5 meters. See August 9, 1996 Order 
of the Montana Board of Environmental Review Concerning Montana Sulphur 
& Chemical Company, (contained in Vol. III, Chapter 25, Section 
56.9.3.9, State of Montana Air Quality Control Implementation Plan), 
Findings of Fact, paragraph 3 (document #II.C-2).
---------------------------------------------------------------------------

    \5\ The State of Montana developed multiple SO2 limits for 
MSCC's main stack. The limit at any point in time is dependent on 
the temperature and flow rate of the gases in the stack.
---------------------------------------------------------------------------

    While MSCC's contractor, CPP, used a scaled NSPS emission rate in 
the MSCC fluid modeling demonstration, the State of Montana's SIP 
revision does not require MSCC to meet the NSPS SO2 emission rate as an 
operating limit for its main stack. Instead, the SIP submission 
contains different SO2 limits for the main stack that are unrelated to, 
and significantly higher than, the NSPS emission rate.
    In establishing MSCC's SIP limits for the main stack, the State of 
Montana did not follow 40 CFR 51.100(kk)(1)'s requirements for 
establishing an alternative to the NSPS limit: MSCC did not show the 
infeasibility of the NSPS limit, the State of Montana did not establish 
an alternative limit in accordance with our BART guidelines, MSCC did 
not use such BART limit in fluid modeling, and the State of Montana did 
not use such BART limit as an upper bound for MSCC's SIP emission 
limit. Thus, the SIP revision is inconsistent with section 123 of the 
Act and our stack height regulations. The TSD for this action discusses 
this more fully. (See document #III.B-1.)
    In addition, the State of Montana approved the 97.5 meter stack 
height credit based on a flawed fluid modeling demonstration.
    First, for purposes of its fluid modeling demonstration, MSCC's 
contractor treated the support structure for the stack as a ``nearby 
structure.'' The fluid modeling demonstration evaluates the effect of 
the source, nearby structures, and nearby terrain (``nearby'' is 
defined at 40 CFR 51.100(jj)) on downwash from the stack through a set 
of paired model runs, one in which the source and all nearby structures 
and terrain features are included, and one in which the source and all 
nearby structures and terrain features are removed from the scale 
mockup of the facility. The stack itself is included in both sets of 
model runs. Results of the two sets are then compared to determine the 
amount of downwash that is being created by the source, nearby 
structures, and nearby terrain features.
    For the model runs in which nearby structures were removed from the 
scale mockup, MSCC's contractor also removed the stack's support 
structure from the scale mockup; i.e., MSCC's contractor modeled 
downwash from the support structure. The support structure is like a 
tin can, approximately eight feet in diameter, that surrounds the stack 
tube and supports it. MSCC has asserted that the support structure 
creates downwash and that it is appropriate to model for such downwash 
because the support structure is ``nearby.''
    While the support structure is clearly within the distance that 40 
CFR 51.100(jj) defines as ``nearby'' with respect to separate 
structures, our position is that the stack's support structure is 
integral to the stack itself, and that it is inappropriate to use part 
of the stack structure to justify a greater stack height credit. 
Otherwise, sources might purposefully design their stacks with support 
structures that create downwash as a means to avoid emissions control, 
in essence using a tall stack to justify itself.
    To the extent MSCC designed a stack that creates excessive 
downwash, MSCC is obligated to address such effects through emissions 
control rather than dispersion. Thus, in conducting its fluid modeling, 
MSCC's contractor should have included the support structure as part of 
the scale mockup of the stack in both sets of model runs. We informed 
the MDEQ of our position on this issue in letters dated January 31, 
1996, March 15, 1996, and July 18, 1996 6 (see

[[Page 40800]]

document #'s II.F-19, II.F-20 and II.C-5, respectively).
---------------------------------------------------------------------------

    \6\ In a June 27, 1994 letter to Jeffrey T. Chaffee, we 
indicated that the support structure could not be used to determine 
formula stack height credit, but that its effects could be 
considered in a fluid modeling demonstration. That letter was issued 
without full consideration of regulatory requirements and was 
superseded by our later letters to the State of Montana. It is 
inappropriate to consider the effects of the support structure in 
determining stack height credit, whether it is through application 
of the formula or through fluid modeling, because part of the stack 
cannot be used to justify the need for the stack.
---------------------------------------------------------------------------

    Put another way, before MSCC erected the 100 meter stack, the 
support structure did not exist; it was creating no downwash, wakes, or 
eddy effects that necessitated the construction of the 100 meter stack. 
The construction of a new structure near a stack may allow a source to 
seek greater stack height credit, but it is contrary to Congressional 
intent to allow the construction of a new stack to create a downwash 
situation that did not previously exist and justify its own stack 
height credit.
    Second, the portion of MSCC's fluid modeling that the State of 
Montana approved 7 only showed an exceedance of the annual 
Montana Ambient Air Quality Standard (MAAQS) for SO2, but not the 
annual NAAQS. See memorandum from John Coefield, Technical Services 
Unit, Montana Air Quality Division, to Files, regarding ``Montana 
Sulphur and Chemical Company (MSCC) GEP stack height demonstration,'' 
dated March 1, 1996 (document #II.C-4); the State's Record of Adoption 
for the Billings/Laurel SO2 SIP, Transcript of Proceedings, August 9, 
1996, pages 5, 6, Testimony of Bob Raisch (see document #II.C-3); 
August 9, 1996 Order of the Montana Board of Environmental Review 
Concerning Montana Sulphur and Chemical Company, (contained in Vol. 
III, Chapter 25, Section 56.9.3.9, State of Montana Air Quality Control 
Implementation Plan), Findings of Fact, paragraph 3 (see document 
#II.C-2). The annual MAAQS for SO2 is a more stringent standard (lower 
number) than the annual NAAQS for SO2 (52 g/
m3 rather than 80 g/m3). In a fluid 
modeling demonstration, use of a lower number makes it easier to show 
an exceedance and, thus, makes it easier to show an excessive 
concentration and justify a higher stack height credit.
---------------------------------------------------------------------------

    \7\ MSCC used a number of approaches in its fluid modeling study 
to attempt to demonstrate above-formula stack height credit. The 
State of Montana approved only one of those approaches, and rejected 
the others. Because the State of Montana rejected MSCC's other 
approaches to fluid modeling, those other approaches are not before 
us as part of the Billings/Laurel SO2 SIP revision and 
are not relevant to this proposal. Even for the approach the State 
of Montana approved, MDEQ had to redo a portion of the analysis 
because CPP, MSCC's contractor, did not follow the guidance MDEQ 
provided. See letter from John A. Coefield, Supervisor, Technical 
Services Unit, to Larry Zink, MSCC, and memorandum from John 
Coefield, Technical Services Unit, to Files, regarding ``Montana 
Sulphur and Chemical Company (MSCC) GEP stack height 
demonstration,'' both documents dated March 1, 1996 (document #II.C-
4).
---------------------------------------------------------------------------

    We do not believe it is proper to use a MAAQS exceedance to justify 
above-formula stack height credit. This is because we interpret the 
stack height regulations to require a showing of an exceedance of the 
NAAQS. This is consistent with Congressional intent that above-formula 
stack height credit only be given in rare circumstances.
    Furthermore, even assuming for the sake of argument that it may 
sometimes be appropriate to use a standard in a fluid modeling 
demonstration that is more stringent than the NAAQS, the fluid modeling 
demonstration must at least show an exceedance of an ambient air 
quality standard that the SIP addresses and that is otherwise 
cognizable under the Act. The 52 g/m3 
SO2 MAAQS is not addressed by the State of Montana's 
Billings/Laurel SO2 SIP revision and is not otherwise cognizable under 
the Act. For purposes of the Billings/Laurel SO2 SIP, the 
MDEQ conducted dispersion modeling to show attainment of the 80 
g/m3 SO2 NAAQS only, not the lower MAAQS. In 
addition, assuming the MAAQS is exceeded in the Billings/Laurel area, 
we are unaware of any mechanism that would permit us to require 
additional source controls to ensure attainment or maintenance of the 
MAAQS.
    The MDEQ's approach is logically inconsistent--in effect, the MDEQ 
has deemed the MAAQS important to protect when MSCC is seeking above-
formula stack height credit, but has deemed the MAAQS irrelevant when 
MSCC's and other sources' emissions limitations are set in the SIP. We 
do not believe Congress intended sources to gain greater stack height 
credit and thereby avoid emissions controls in the SIP through such an 
artificial reduction in the benchmark used in fluid modeling, 
especially where the rest of the SIP is not designed in order to attain 
or maintain that benchmark. Therefore, although the MAAQS may in theory 
be a more protective standard, by allowing the use of the MAAQS for 
purposes of MSCC's fluid modeling demonstration, the MDEQ has applied 
the stack height requirements in a way that renders them less stringent 
than Congress intended.
(d) Conclusion
    For the foregoing reasons, we are proposing to disapprove the 97.5 
meter stack height credit the State of Montana has allowed MSCC for its 
100-meter stack (paragraph 2 of the MSCC stipulation), the SO2 
emissions limitations the State of Montana has included in the SIP for 
such stack (section 3(A)(1)(a) and (b) and section 3(A)(3) of MSCC's 
exhibit), and, consequently, the State of Montana's attainment 
demonstration.
3. Language in Exxon and MSCC's Stipulations Related to Incorporation 
of Earlier Stipulations and Apportionment of the Airshed
    Paragraph 1 of the Exxon and MSCC stipulations discusses a 
contested case hearing and resultant February 2, 1996 stipulation and 
incorporates the February 2, 1996 stipulation by reference. We don't 
believe it is appropriate to incorporate the February 2, 1996 
stipulation into the SIP because it discusses procedures and schedules 
for developing emission limitations for Exxon and MSCC which have 
subsequently been developed and which, for MSCC, are not approvable 
(see discussion on stack height issue at MSCC in section III.B.2, 
above, and in section III.C.(2)(q) of our TSD). Paragraph 1 of the 
Exxon and MSCC stipulations also contains a statement that the company 
enters into the stipulation ``in part, to preserve [the company's] 
rights to apportionment of the airshed resulting from the present SIP 
revision.'' Insofar as this statement implies that the companies or 
other air pollution sources are entitled to a property interest in the 
ambient air in the Billings/Laurel area or enjoy a right to pollute the 
ambient air, this statement conflicts with the purpose and statutory 
obligations of the Act and has no basis under federal law. Therefore, 
we are proposing to disapprove paragraph 1 of the Exxon and MSCC 
stipulations.
4. MSCC Auxiliary Vent Stacks
    It came to our attention that the Railroad Boiler and H-1, H1-A, 
H1-1 and H1-2 units (heaters) at MSCC all had auxiliary vent stacks to 
exhaust emissions. It was unclear whether these auxiliary vent stacks 
were still functional and allowed to be used under the stipulation; 
sections 3(B)(3) and (4) of the MSCC exhibit appear to provide an 
exemption for minor sources, which these sources could be considered to 
be.
    The July 29, 1998 submittal of the SIP provided additional modeling 
showing that emissions from the auxiliary vent stacks would not impact 
the attainment demonstration when the emissions are limited to 12 lbs 
of SO2/3-hours. The July 29, 1998 submittal of the SIP includes the 12 
lbs of SO2/3-hours limitation on the auxiliary vent stacks.
    We were concerned, however, that this emission limitation might not 
be enforceable. There is no CEMS for these emission points. Instead, 
MSCC's exhibit requires MSCC to report the date

[[Page 40801]]

and time period that emissions are exhausted from the auxiliary vent 
stacks, report the operating units whose emissions are exhausted from 
the auxiliary vent stacks, and include engineering estimates of the 
three-hour emissions and daily emissions from the auxiliary vent 
stacks. Based on discussions with MDEQ staff, we understand that there 
could be situations in which, if the fuel gas burned were high in H2S 
concentration and some or all of the boilers were exhausting from the 
auxiliary vent stacks, MSCC could not meet the emission limitation. See 
discussion of the 30-meter stack at MSCC in section II.A.4 above.
    We are proposing to disapprove the MSCC auxiliary vent stacks 
emission limitation (section 3(A)(4) of MSCC's exhibit). We believe it 
is necessary to propose to disapprove this emission limitation because, 
unlike the 30-meter stack emission limitation, the exhibit does not 
require that only low sulfur fuel gas or natural gas be burned in the 
boilers and heaters that are exhausting from auxiliary vent stacks. 
Without a restriction on the fuel burned in the boilers and heaters 
when they are exhausting from auxiliary vent stacks, there is the 
potential for the emission limitation to be exceeded.
5. Attainment Demonstration 8
---------------------------------------------------------------------------

    \8\ We recently learned that an improper stack height was used 
for the flare stack at Exxon for both the State of Montana's and our 
modeling. These modeling efforts used a stack height of 60.4 meters 
when in fact the actual stack height is 50.3 meters. Any future 
modeling done for the Billings/Laurel airshed, including modeling 
for the FIP, should use the correct flare stack height at Exxon. 
Finally, we have learned that there may be some other minor emission 
points at sources that were not considered in the MDEQ's attainment 
demonstration modeling (or our confirmation of the modeling) or that 
were not limited by the SIP. We may evaluate the need to model and/
or limit these other minor emission points when we complete our FIP. 
We believe it is appropriate to proceed with the actions laid out in 
this document in spite of the recently discovered concerns with the 
Exxon flare height and other minor sources because we are proposing 
to disapprove the attainment demonstration.
---------------------------------------------------------------------------

    For us to fully approve a SIP, the SIP must show that the NAAQS 
will not be violated, i.e., that the area demonstrates attainment. 
Attainment demonstrations are usually carried out with computer models 
that are approved by us. The computer models take numerous factors into 
consideration to predict the effects that emissions from various 
sources will have on levels of pollutants in the air. Models consider 
the typical meteorology and topography of the area, as well as physical 
parameters at a plant site, e.g., the height, temperature, and velocity 
at which pollutants are emitted. Based on these factors, as well as 
restrictions placed on sources to control their emissions, models are 
used to predict the highest pollution levels that can be expected to 
occur in the future.
a. Improper Stack Height Credit and Emission Limitation at MSCC
    The MDEQ used EPA-approved dispersion models to demonstrate 
attainment of the SO2 NAAQS in the Billings/Laurel area. However, the 
modeling for the July 29, 1998 submittal of the SIP relied on emission 
limitations at MSCC that were established with a stack height credit 
that exceeded the good engineering practice (GEP) stack height. As 
discussed above, we are proposing to disapprove the emission 
limitations and stack height credit for the 100-meter stack at MSCC. We 
are also proposing to disapprove the attainment demonstration because 
it relies on improper emission limitations and stack height credit.
b. Lack of Flare Emission Limitations
    With the July 29, 1998 submittal of the SIP, the State of Montana 
removed all reference to flare emission limitations from the exhibits 
submitted for Federal approval. In June 1998, the MBER adopted 
``Additional State Requirements'' (hereinafter referred to as ``State-
only provisions'') for each of the seven sources in the Billings/Laurel 
area. The State-only provisions include flare emission limitations and 
reporting requirements for the four sources that have flares (Exxon, 
Conoco, Cenex, and MSCC). Because the State-only provisions were not 
submitted for inclusion in the Billings/Laurel SO2 SIP, they may be 
enforced only by the MDEQ. We believe we cannot propose to approve the 
SIP as it applies to the attainment demonstration without federally 
enforceable emission limitations on flares, for several reasons.
    First, the attainment demonstration is based on limited emissions 
from flares. To account for non-emergency use of flares, the computer 
modeling assumed a limit of 150 pounds of SO2/3 hours for each source 
for flaring. Our SIP requirements, 40 CFR part 51, subpart G, discuss 
control strategy requirements for SIPs. ``Control strategy,'' defined 
at 40 CFR 51.100(n), ``means a combination of measures designated to 
achieve the aggregate reduction of emissions necessary for attainment 
and maintenance of national standards * * *.'' Subpart G, at section 
51.112, indicates that each plan must demonstrate that the measures, 
rules, and regulations contained in it are adequate to provide for 
timely attainment and maintenance of the national standards that it 
implements. These demonstrations are usually performed through 
modeling. Further, 40 CFR 51.281 indicates that all emission 
limitations and other measures necessary for attainment and maintenance 
of any national standard must be adopted as rules and regulations 
enforceable by the State agency. Finally, copies of all such rules and 
regulations must be submitted with the plan. Therefore, because 
attainment of the NAAQS in the Billings/Laurel area, as demonstrated 
through modeling, assumes that flare emissions are limited, we believe 
that the SIP must include enforceable emission limitations for flares.
    Second, based on MDEQ correspondence and ongoing discussions, we 
understand that emissions other than emissions from upsets and 
malfunctions (i.e., otherwise routine emissions) occur at the flares. 
(See document #'s II.B-18 and II.E-9.) Because routine emissions occur 
at the flares, we believe it is appropriate to establish enforceable 
emission limitations for flares.
    Finally, without emission limitations on flares, it appears that 
sources could direct emissions from other process units to the flares 
to avoid violating an emission limitation or other requirement. It does 
not appear that sources could be penalized through the SIP if such 
circumvention occurred.
    Since flare emissions were considered part of the attainment 
demonstration and since there appear to be routine emissions from 
flares, we believe the SIP should contain enforceable emission 
limitations for these emission points. Therefore, we are proposing to 
disapprove the SIP as it applies to the attainment demonstration for 
lack of enforceable emission limitations for flares.
c. Proposed Disapproval of MSCC Auxiliary Vent Stacks Emission 
Limitation
    As indicated above, we are proposing to disapprove the emission 
limitation on the auxiliary vent stacks in MSCC's exhibit because 
MSCC's exhibit does not require that only low sulfur fuel gas or 
natural gas be burned in the boilers and heaters that are exhausting 
from auxiliary vent stacks. The attainment demonstration relies on the 
auxiliary vent stacks emission limitation at MSCC. Since we are 
proposing to disapprove the limit, we believe it is also necessary to 
propose to disapprove the attainment demonstration.

[[Page 40802]]

6. Burning of Sour Water Stripper (SWS) Emissions in the Flare at Cenex 
and Exxon
    With the July 29, 1998 submittal of the SIP, Cenex and Exxon's 
exhibits now allow SWS emissions to be burned in the flare. As 
discussed above, flare emission limitations were deleted from the July 
1998 submittal. Therefore, SWS emissions, if burned in the flare, are 
unregulated. We believe that unless flares have an enforceable emission 
limitation, it is unacceptable to allow SWS emissions to be burned in 
the flare. Because we believe that allowing SWS emissions to be burned 
in the unregulated flare is not an acceptable approach, we are 
proposing to disapprove the SIP as it applies to those provisions of 
the Cenex exhibit ( i.e, sections 3(B)(2) and 4(D), only as they apply 
to flares) and the Exxon exhibit (i.e., sections 3(E)(4) and 4(E), only 
as they apply to flares).
7. Reasonably Available Control Measures (RACM) Including Reasonably 
Available Control Technology (RACT) and Reasonable Further Progress 
(RFP) at Cenex
    As indicated earlier, we are proposing to disapprove the attainment 
demonstration for the SIP. Because we are proposing to disapprove the 
attainment demonstration, we are proposing to conclude that the RACM 
(including RACT) and RFP requirements have not been met in the Laurel 
SO2 nonattainment area. See discussion in sections III.C.(15) and (16) 
of our TSD for further information.

C. Why Is EPA Proposing To Conditionally Approve Parts of the State of 
Montana's Plan?

    Under section 110(k)(4) of the Act, we may conditionally approve a 
plan based on a commitment from the State of Montana to adopt specific 
enforceable measures by a specified date certain that does not exceed 
one year from our final conditional approval. If the State of Montana 
fails to meets its commitment, the approval is automatically converted 
to a disapproval. Specifically, if the State of Montana fails to adopt 
and submit any of the provisions for the commitments identified below, 
we will issue a letter to the State of Montana which informs the State 
that the conditional approval, for the specific provisions identified 
below, will automatically convert to a limited approval/limited 
disapproval. We will not institute notice-and-comment rulemaking before 
issuing the letter because we are now notifying the public that our 
conditional approval of any of the SIP provisions identified below will 
convert to limited approval/limited disapproval if the State of Montana 
fails to meet a commitment for a specified provision. Subsequently, a 
notice to that effect will be published in the Federal Register and 
appropriate language will be inserted into the Code of Federal 
Regulations.
    If the State of Montana makes a complete submittal by the specified 
timeframe or before we finalize this conditional approval, we will 
evaluate that submittal to determine if it may be approved and take 
final rulemaking action on that submittal.
1. YELP's Emission Limitations
a. Re-written Emission Limitation
    With the exhibits submitted by the State of Montana in 1995, 1996 
and 1997, several emission limitations varied at Exxon during the 
startup and shutdown of YELP. Basically, Exxon is subject to a higher 
emission limitation (at the FCC Coker CO-boiler stack and the FCC CO-
boiler stack) when YELP is starting up, shutting down, or not operating 
than when YELP is operating. We were concerned that the initial 
attainment demonstration modeling did not accurately represent the 
relationship between Exxon and YELP.
    With the July 29, 1998 submittal of the SIP, the MDEQ remodeled and 
revised YELP's exhibit to address this issue. The modeling showed that 
there could be simultaneous emissions at Exxon and YELP without 
exceeding the NAAQS, except during the hours between 9:00 pm and 6:00 
am. Therefore, the YELP exhibit contains time-of-day restricted 
emission limitations that YELP must achieve during periods when the 
Exxon coker CO-boiler is burning coker gas. See discussion under 
modeling, section III.C.12 of our TSD.
    We believe the revised strategy is acceptable for the following 
reasons:

     The MDEQ's dispersion modeling and our confirmation of 
the modeling (see modeling discussion in section III.C.12 of our 
TSD) show that with the time-of-day restrictions the area can still 
show attainment of the NAAQS. We believe that the modeling was 
performed appropriately. The modeling report, entitled 
``Simultaneous Emissions Modeling Sulfur Dioxide Exxon Coker and 
YELP,'' was submitted with the July 1998 submittal (see document 
#II.E-3).
     We do not consider time-of-day restrictions to be a 
dispersion technique as defined by 40 CFR 51.100(hh)(1)(ii) because 
the time-of-day restricted emission limitations are based on 
historical meteorological data and do not vary according to 
atmospheric conditions or ambient concentrations of a pollutant.
     We believe the emission limitations are enforceable 
because YELP is required to operate CEMS. Specifically, SO2 
concentration and flow CEMS are required on the stack that is 
subject to the time-of-day restrictions. The CEMS will be able to 
determine the SO2 emissions at all times. Additionally, a flow CEM 
is required to measure flow from the Exxon coker unit process 
stream. The latter flow monitor will provide information to 
determine whether or not YELP is receiving Exxon's coker unit flue 
gas.

    Additionally, in a March 2, 1999 letter to MDEQ (see document # 
II.E-11), we raised the concern that the YELP emission limitations may 
not be practically enforceable. Specifically, the YELP emission 
limitations in section 3 of YELP's exhibit are based on whether or not 
Exxon's coker CO-boiler is burning coker gas. It is our understanding 
that there is no monitor to record whether or not the Exxon coker CO-
boiler is burning coker gas. We believe that the YELP emission 
limitations must be written in the same format as the emission 
limitations in Exxon's exhibit. Thus, YELP's emission limits must be 
expressed in terms of whether or not YELP is receiving Exxon coker unit 
flue gas because there is a monitor that can record this condition.
    In a letter dated March 24, 1999, the Governor committed to address 
our concerns with YELP's emission limitations by March 31, 2000. (See 
document #II.E-5.)
    Because the State of Montana has committed to revise YELP's exhibit 
to rewrite the emission limitations to make them practically 
enforceable, we are proposing to conditionally approve the July 29, 
1998 submittal of the SIP as it applies to YELP's emission limitations 
at sections 3(A)(1) and (2) of YELP's exhibit. We realize, however, 
that the time-of-day restricted emission limitations may be somewhat 
more difficult to enforce than a simple fixed limitation. If we were to 
find that the time-of-day restricted emission limitations were too 
difficult for the MDEQ or us to enforce, we would reconsider our 
approval. Our reconsideration could occur under section 110(k)(6) of 
the Act or we could complete another SIP Call under sections 
110(a)(2)(H) and 110(k)(5) of the Act or take other appropriate action 
under the Act.

b. Pro-Rated Emission Limitation

    The YELP exhibit provides that for any 3-hour period during the 
course of a calendar day when both the time-of-day restricted emission 
limitation and the unrestricted emission limitation apply (time-of-day 
and unrestricted emission limitations discussed above), a

[[Page 40803]]

new emission limitation for the 3-hour period will apply. The new 
limitation will be determined by pro-rating, on an hourly basis, the 
time-of-day restricted emission limitation and the unrestricted 
emission limitation. We do not believe that YELP's exhibit adequately 
addresses how the emission limitation will be pro-rated in practice or 
what emission limitations will be pro-rated. In a letter dated March 
24, 1999, the Governor of Montana committed to revise the YELP 
stipulation to address this concern by March 31, 2000. (See document 
#II.E-5.)
    Because the State of Montana has committed to revise YELP's exhibit 
to more clearly define how and what limitations will be pro-rated, we 
are proposing to conditionally approve the July 29, 1998 submittal of 
the SIP as it applies to YELP's emission limitations in section 3(A)(3) 
YELP's exhibit. We realize, however, that the pro-rated emission 
limitations may be somewhat more difficult to enforce than a simple 
fixed limitation. If we were to find that the pro-rated emission 
limitations were too difficult for the MDEQ or us to enforce, we would 
reconsider our approval. Our reconsideration could occur under section 
110(k)(6) of the Act or we could complete another SIP Call under 
sections 110(a)(2)(H) and 110(k)(5) of the Act or take other 
appropriate action under the Act.
2. Exxon's Coker Carbon Monoxide (CO)-Boiler Emission Limitation
    In the July 29, 1998 submittal, Exxon's exhibit has not been 
revised to provide a method to monitor emissions from the coker CO-
boiler. In a letter dated March 24, 1999, the Governor provided a 
commitment to develop and submit a compliance method for this emission 
point by March 31, 2000.9 (See document #II.E-5.)
---------------------------------------------------------------------------

    \9\ Note that the Governor initially submitted a commitment with 
the July 29, 1998 submittal of the SIP to develop the necessary 
compliance monitoring method by December 31, 1998. Due to 
difficulties in developing the method, on October 26, 1998, the 
Governor revised his commitment, with a deadline of June 30, 1999 
(see document # II.E-4). Again, on March 24, 1999, the Governor 
revised his commitment with a deadline of March 31, 2000. See 
document # II.E-5.) We believe that since we had not taken action on 
the initial commitment, it was acceptable for the Governor to revise 
the commitment.
---------------------------------------------------------------------------

    We are proposing to conditionally approve the SIP as it applies to 
the coker CO-boiler stack emission limitation, section 3(B)(1) of 
Exxon's exhibit, based on the Governor's commitment to adopt a 
compliance monitoring method for the coker CO-boiler stack emission 
limitation.
3. Exxon's F-2 Crude/Vacuum Heater Stack Emission Limitations and 
Attendant Compliance Monitoring Methods
    The July 29, 1998 submittal of the SIP revised attachment 2 of 
Exxon's exhibit, which describes the analytical method used to 
determine the H2S concentration in the sour water. The H2S 
concentration in the sour water is needed to determine compliance with 
the F-2 crude/vacuum heater stack emission limitations. In a letter 
dated January 15, 1999, we identified concerns with the revised 
attachment 2. In a letter dated March 24, 1999, the Governor committed 
to revise attachment 2 to address our concerns by March 31, 2000. (See 
document #'s II.E-10 and II.E-5, respectively.) We are proposing to 
conditionally approve the SIP as it applies to the F-2 crude/vacuum 
heater stack emission limitation and the attendant compliance 
monitoring methods, sections 3(E)(4) and 4(E) [only as they apply to 
the F-2 crude/vacuum heater stack], 3(A)(2), 3(B)(3), and attachment 2, 
of Exxon's exhibit, based on the Governor's commitment to revise 
attachment 2 of Exxon's exhibit, which provides the method used to 
monitor compliance with the F-2 crude/vacuum heater stack emission 
limitation.
4. Exxon's Fuel Gas Combustion Emission Limitations and Attendant 
Compliance Monitoring Method
    The July 29, 1998 SIP submittal does not completely address earlier 
concerns we raised regarding the compliance monitoring method for 
Exxon's fuel gas combustion emission limitations. In a letter dated 
January 15, 1999, we indicated that we still believed the compliance 
monitoring method for the fuel gas combustion emission limitation at 
Exxon was inadequate because H2S concentration in the refinery fuel-gas 
fired units could exceed the levels which the H2S CEMS could monitor. 
(See document #II.E.10)
    On March 24, 1999, the Governor submitted a commitment to address 
our concerns with the H2S CEMS at Exxon by March 31, 2000. (See 
document #II.E-5.)
    We are proposing to conditionally approve the SIP as it applies to 
Exxon's refinery fuel-gas combustion emission limitations and attendant 
compliance monitoring methods, in sections 3(A)(1), 3(B)(2), 4(B), and 
6(B)(3) of Exxon's exhibit, because of the Governor's commitment to 
address our concerns with the method for monitoring compliance with the 
emission limitation.
5. Cenex Sour Water Stripper (SWS)
    The earlier Cenex exhibits (i.e., those submitted prior to the July 
29, 1998 submittal) did not provide a means to monitor compliance with 
the combined boiler/heater emissions limitation if emissions from the 
existing SWS unit were directed to the main crude heater since 
compliance with the combined emissions limitation was monitored by fuel 
usage and sulfur content of the fuel. In the July 29, 1998 submittal of 
the SIP, the State of Montana has incorporated into attachment 2 a 
method for monitoring compliance when SWS emissions are burned in the 
main crude heater. This method is similar to the method used by Exxon 
to determine SWS emissions. We expressed concerns about the method used 
to determine SWS emissions in a letter dated January 15, 1999. (See 
document #II.E-10.) In a letter dated March 24, 1999, the Governor of 
Montana committed to revise Cenex's SWS test method to address our 
concerns by March 31, 2000. (See document #II.E-5.) We are proposing to 
conditionally approve the SIP as it applies to the combustion sources 
emission limitations and attendant compliance monitoring method in 
sections 3(B)(2) and 4(D) (only as they apply to the main crude 
heater), 3(A)(1)(d), 4(B), and attachment 2, of Cenex's exhibit.

D. What Happens When EPA Approves Parts of the State of Montana's Plan?

    Once we approve a SIP, it is legally enforceable by us and citizens 
under the Act.

E. What Happens When EPA Disapproves Parts of the State of Montana's 
Plan?

    Once we disapprove a SIP, it is still enforceable at the State 
level but not at the Federal level. By disapproving parts of the plan, 
we are determining that the requirements necessary to demonstrate 
attainment have not been met and we may develop a plan or parts of a 
plan to assure that attainment will be achieved in the area. Also, in 
some cases, once we disapprove a plan, sanctions may be imposed.

III. Other Issues Pertaining to State Authority

A. How Do the State-Only Provisions Affect EPA's Actions?

    In June 1998, the MBER adopted ``Additional State Requirements'' 
for each of the seven sources in the Billings/Laurel area. These 
requirements (hereinafter referred to as the ``State-only provisions'') 
were not submitted for inclusion in the SIP and are

[[Page 40804]]

enforceable only by the State of Montana. Among the State-only 
provisions are requirements for the affected companies to develop and 
submit to the MDEQ the following documents: Corrective Action Plan, 
Alternative Monitoring Plan, Quality Assurance Project Plans, and 
Standard Operating Procedures document. By the terms of the State-only 
provisions, these documents will affect how the MDEQ makes certain 
compliance determinations. For example, for purposes of monitoring 
whether a source has satisfied the quarterly data recovery rate (QDRR) 
requirement of the Billings/Laurel SO2 SIP, the MDEQ will rely on a 
source's Standard Operating Procedures manual to specify what is an 
``adequate spare parts inventory.'' What is ``timely and appropriate 
action to correct a failure in the CEMS'' will be outlined in the 
source's Corrective Action Plan, Quality Assurance Project Plan, and 
Standard Operating Procedures document. ``Short-term corrective 
measures'' and ``long-term corrective measures'' for CEMS failure will 
be specified in a similar fashion. When a CEMS fails, the source will 
correct or replace the CEMS ``as expeditiously as practicable and 
within a period not to exceed six months'' according to a schedule 
already established in the source's Corrective Action Plan.
    Since the State-only provisions were not included in the Billings/
Laurel SO2 SIP, we are not acting to propose to approve or disapprove 
these provisions nor are we relying on these provisions in proposing to 
approve or disapprove other provisions in the submitted SIP. Nothing in 
this action should be construed as making any determination or 
expressing any position regarding the State-only provisions or their 
impact on the SIP. State-only provisions can affect only State 
enforcement of the SIP and cannot have any impact on federal 
enforcement authorities. We may at any time invoke our authority under 
the Act, including, for example, sections 113, 114, or 167, to enforce 
the requirements of the Billings/Laurel SO2 SIP independent of any 
State enforcement effort. We may take action to enforce the SIP 
regardless of any State compliance determination or any constraint on 
State enforcement discretion which the State-only provisions may 
impose. In addition, citizen enforcement under section 304 of the Act 
is likewise unaffected by the State-only provisions.
    If we were to determine that the State-only provisions, as 
implemented, appeared to limit, constrain, or otherwise have a chilling 
effect on state enforcement of the SIP, we would reconsider our 
approval or take other appropriate action under the Act. Our 
reconsideration could occur under section 110(k)(6) of the Act or we 
could complete another SIP Call under sections 110(a)(2)(H) and 
110(k)(5) of the Act.

B. How Does Montana's Environmental Audit Act Affect EPA's Actions?

    On May 5, 1997, the Governor of Montana signed a bill enacted by 
the legislature that creates immunity under State law from penalties 
for violations discovered during a voluntary environmental audit and 
creates a judicial privilege under State law for information contained 
in an environmental audit report. This bill has not been submitted to 
EPA as part of Montana's SIP.
    Nothing in our proposed action should be construed as making any 
determination or expressing any position regarding the State of 
Montana's audit privilege and penalty immunity law, the Voluntary 
Environmental Audit Act, 75-1-101 et seq., M.C.A. (H.B. 293, effective 
October 1, 1997), or its impact upon any provision in the SIP including 
the proposed revision at issue here. Our proposed action does not 
express or imply any viewpoint on the question of whether there are 
legal deficiencies in this or any other Clean Air Act program resulting 
from the effect of the State of Montana's audit privilege and immunity 
law. The State of Montana's audit privilege and immunity law can affect 
only state enforcement and cannot have any impact on federal 
enforcement authorities. We may at any time invoke our authority under 
the Act, including for example, sections 113, 114, or 167, to enforce 
the requirement or prohibitions of the State of Montana's plan, 
independent of any state enforcement effort. In addition, citizen 
enforcement under section 304 of the Act is likewise unaffected by a 
state audit privilege or immunity law.

IV. Other Rulemaking Actions

A. How Does This Proposed Rulemaking Relate to EPA's SIP Call?

    Our March 4, 1993 SIP Call letter (see document # II.G-1) stated 
that the SIP Call was not final Agency action subject to judicial 
review, and that a final Agency action would occur when we made a 
binding determination regarding the State's response to the SIP Call. 
With this document we are proposing action on the State of Montana's 
response to the March 4, 1993 SIP Call; we will make a binding 
determination regarding Montana's response to the SIP Call if and when 
we take final rulemaking action based on this proposal.

B. Why Is EPA Proposing Sanctions?

    Under section 179(a)(3)(B) of the Act, if we disapprove in whole or 
in part a submission of a SIP revision required under the Act, one of 
the sanctions specified in section 179(b) applies, unless the 
deficiency has been corrected within 18 months after our disapproval. 
Section 179(b) specifies two sanctions available to the Administrator: 
(1) withholding of certain highway funding under section 179(b)(1); and 
(2) application of a 2:1 offset ratio to new or modified stationary 
sources of emissions for which a new source review permit is required 
under part D of title I.
    We have promulgated final regulations to implement section 179 of 
the Act. See 59 FR 39832 (August 4, 1994); 40 CFR 52.31 (the 
``sanctions rule''). The regulations specify the order in which 
sanctions will apply when states do not submit a part D SIP or SIP 
revision or implement an approved part D SIP or SIP revision, or we 
disapprove a part D SIP or SIP revision. The sanctions rule does not, 
however, address the imposition of sanctions in the case of state 
failure to submit or implement a SIP in response to a SIP Call under 
section 110(k)(5) of the Act, or where we disapprove such a SIP. Since 
we are proposing to partially disapprove the SIP revision the State of 
Montana has submitted in response to our SIP Call, which would render 
our SIP Call binding, we believe it is appropriate to propose the order 
of sanctions for the State of Montana's failure to comply with the SIP 
Call, in the event that we finalize our proposal to disapprove portions 
of the SIP. We believe that the regulatory scheme promulgated for 
sanctions generally, under 40 CFR 52.31, should also apply here, for 
the same reasons as discussed in the sanctions rule (see 59 FR 39832). 
Thus, we are proposing to apply the 2:1 offset sanction within 18 
months of the effective date of a final partial disapproval of the SIP 
and the highway sanction six months after the imposition of the offset 
sanction. We believe that the rationale for this approach in the 
sanctions rule (see 59 FR 39832) applies with equal force here. In 
addition, we're considering whether the particular circumstances here--
namely that the State of Montana submitted the required SIP revision in 
September 1995 one year after our SIP Call's deadline for submittal, 
and subsequently amended the submission in 1996, 1997, and 1998 without 
ever establishing a fully

[[Page 40805]]

approvable SIP--may merit acceleration of sanctions. That is, we 
request comment on whether we should provide for the immediate 
application of sanctions under section 110(m) of the Act if we finalize 
our proposal to partially disapprove the SIP or if a conditional 
approval converts to disapproval. In addition, we request comment on 
whether we should provide for application of sanctions in other areas 
of the State, outside the Laurel nonattainment area, under section 
110(m) of the Act, if we finalize our proposal to partially disapprove 
the SIP or if a conditional approval converts to disapproval.

V. Background

A. What Is a State Implementation Plan (SIP)?

    The 1970 Act established the air quality management process as a 
basic philosophy for air pollution control in this country. Under this 
system, we establish air quality goals (NAAQS) for common pollutants. 
States develop control programs (termed SIPS) to attain and maintain 
these NAAQS. We approve SIPS if they adequately accomplish the 
following:
     Demonstrate attainment and maintenance of the applicable 
NAAQS.
     Describe a control strategy.
     Contain legally enforceable regulations.
     Include an emissions inventory.
     Include procedures for new source review.
     Outline a program for monitoring.
     Show adequate resources.
     Meet other requirements specific to the pollutant being 
considered.
     Are adopted according to the State's and our procedural 
requirements, including public input.
    Under this air quality management process, we do not dictate to the 
States the control strategies that are needed to demonstrate attainment 
and maintenance. States are provided the flexibility to determine what 
is appropriate in terms of controlling a particular pollutant. We 
provide technical assistance when needed.

B. What Are the Sulfur Dioxide (SO2) National Ambient Air Quality 
Standards (NAAQS)?

    On April 30, 1971, we issued primary and secondary NAAQS for sulfur 
oxides (SOx) (measured as sulfur dioxide (SO2)) (40 CFR 
50.4). The primary standards were set at 365 micrograms per cubic meter 
(g/m \3\) (0.14 parts per million (ppm)), averaged over a 24-
hour period and not to be exceeded more than once per year, and 80 
g/m \3\ (0.03 ppm) annual arithmetic mean. The secondary 
standard was set at 1,300
g/m \3\ (0.5 ppm) averaged over a period of 3 hours and not to 
be exceeded more than once per year. See our TSD to this action for 
more information on the SO2 NAAQS.

C. What Is the Regulatory History in Billings/Laurel, Montana?

    The SO2 problems in the Billings/Laurel area go back over twenty 
years. On July 8, 1976 (41 FR 28002), we announced in the Federal 
Register that the SIP for the Billings air quality maintenance area 
(AQMA) was inadequate to provide for the maintenance of the SO2 NAAQS. 
The Billings AQMA encompasses Carbon, Stillwater, Sweet Grass, 
Yellowstone and Big Horn (excluding the Northern Cheyenne Indian 
Reservation) counties.
    The Governor of Montana submitted a SIP revision on January 26, 
1978, which included a stipulation (discussed below). (The January 26, 
1978 SIP can be found in our docket for our action taken on September 
6, 1979, 44 FR 51977.) However, the SIP revision did not include a 
demonstration that the known NAAQS violations would be corrected.
    In the interim, the Act was amended in 1977, changing our approach 
for areas not attaining the NAAQS. Section 107 required us to 
officially designate areas violating the NAAQS as nonattainment.
    On March 3, 1978 (43 FR 8962), Laurel was designated as 
nonattainment for the primary SO2 NAAQS. See also 40 CFR 81.327. The 
nonattainment area consists of an area with a two-kilometer radius 
around the Cenex Petroleum Refinery. This designation was based on 
measured and modeled violations of the NAAQS. We reaffirmed this 
nonattainment designation on September 11, 1978 (43 FR 40412).
    On September 6, 1979 (44 FR 51977), we approved the revisions to 
the Montana SIP submitted on January 26, 1978. The revision included a 
stipulation between the Montana Department of Health and Environmental 
Science and Cenex. Other companies that were parties to the stipulation 
include Exxon, Conoco, Montana Power, Western Sugar and Montana Sulphur 
& Chemical Company. Since the January 26, 1978 SIP submittal did not 
include a demonstration that the NAAQS violations in Laurel would be 
corrected, we contracted with Pacific Environmental Science (PES) to 
quantify the emission reductions expected from Cenex. Based on an 
October 1978 report by PES and diffusion modeling performed by the 
State of Montana, we believed that the NAAQS would be attained in 
Laurel after full implementation of the control program proposed at 
Cenex. (PES's October 1978 report and the State of Montana's diffusion 
modeling report can be found in our docket for our action taken on 
September 6, 1979, 44 FR 51977.)
    On January 10, 1980 (45 FR 2034), we approved the Laurel plan, 
submitted in 1978, as meeting the part D requirements of the Act.

D. Why Did EPA Call for a SIP Revision?

    The 1990 Act maintains the requirement that states revise SIPs once 
inadequacies have been identified. Section 110(k)(5) of the Act states 
that ``whenever the Administrator finds that the applicable 
implementation plan for any area is substantially inadequate to attain 
or maintain the relevant NAAQS, * * * the Administrator shall require 
the state to revise the plan as necessary to correct such inadequacies. 
The Administrator shall notify the state of the inadequacies, and may 
establish reasonable deadlines (not to exceed 18 months after the date 
of such notice) for the submission of such plan revisions.''
    Results from two different dispersion modeling studies--the study 
for the Billings Gasification, Inc. (BGI) (now YELP) permit and the 
GeoResearch, Inc. (GRI) study commissioned by the Billings City Council 
and subsequently refined by the State of Montana--both showed projected 
violations of the NAAQS for sulfur dioxide (SO2) at various receptor 
points in the Billings and Laurel area. In the Laurel area, the 
receptor points were outside the existing nonattainment area boundary. 
(See document #'s III.G-12 and III.G-13 for copies of the GRI and BGI 
study reports.)
    In both the BGI and GRI modeling studies, the analysis was 
performed using the modeling techniques and data bases recommended in 
our ``Guideline on Air Quality Modeling (Revised),'' found in 40 CFR 
part 51, appendix W. Major sources of SO2 in the Billings/Laurel area 
(the Conoco, Exxon, and Cenex refineries, Montana Power, Montana Sulfur 
and Chemical Company, and Western Sugar) all contributed to high 
ambient concentrations of SO2. The modeling studies predicted 
violations using actual emissions from these sources, allowable 
emissions (the higher levels allowed under then-current permits), and 
potential emissions (maximum capacity, at the time, of a stationary 
source to emit a pollutant under its physical and operational design). 
These results led us to believe that the SIP was inadequate

[[Page 40806]]

and should be revised. Therefore, on March 4, 1993, we issued a letter 
to the Governor of Montana calling for the State of Montana to revise 
its SIP for the Billings/Laurel area to assure attainment and 
maintenance of the SO2 NAAQS. (See 58 FR 41430, August 4, 1993, and 
document #'s II.G-1 and II.G-3.)

E. What Did the State of Montana Submit in Response to EPA's SIP Call?

    Our 1993 SIP Call called for the State of Montana to submit a SIP 
revision for the Billings/Laurel area by September 4, 1994. On 
September 6, 1995, the Governor of Montana submitted a SIP revision in 
response to the SIP Call (see document # II.B). The SIP was later 
amended with revisions submitted on August 27, 1996, April 2, 1997 and 
July 29, 1998 (see document #'s II.C., II.D., and II.E., respectively).

F. What Sources Does the SIP Affect?

    The major SO2 emitting industries in the Billings area are the 
Conoco and Exxon Petroleum Refineries, Western Sugar Company, the 
Montana Power Company J.E. Corette Plant, Montana Sulphur & Chemical 
Company, and Yellowstone Energy Limited Partnership. The major SO2 
emitting industry in the Laurel area is the Cenex Petroleum Refinery. 
Although Laurel and Billings are 15 miles apart, the industries in 
Billings have some impact on the air quality in Laurel and the industry 
in Laurel has some impact on the air quality in Billings.
    The Billings/Laurel SO2 SIP regulates most of the SO2 emission 
points at the above-mentioned sources.

VI. Request for Public Comment

    We are soliciting public comment on all aspects of this proposed 
SIP rulemaking action. Send your comments in duplicate to the address 
listed in the front of this Notice. We'll consider your comments in 
deciding our final action if your letter is received before August 27, 
1999.

VII. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 12866, entitled ``Regulatory 
Planning and Review.''

B. Executive Order 12875

    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a state, local, 
or tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments, or EPA consults with those governments. If EPA complies by 
consulting, Executive Order 12875 requires EPA to provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected state, local, and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of state, local, and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    Today's proposed rule does not create a mandate on state, local or 
tribal governments. The proposed rule does not impose any enforceable 
duties on these entities. This proposed rule, if made final, will have 
the effect of making existing, state-enforceable requirements federally 
enforceable against seven industrial sources of air pollution. 
Accordingly, the requirements of section 1(a) of Executive Order 12875 
do not apply to this proposed rule.

C. Executive Order 13045

    Protection of Children from Environmental Health Risks and Safety 
Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is 
determined to be ``economically significant'' as defined under E.O. 
12866, and (2) concerns an environmental health or safety risk that EPA 
has reason to believe may have a disproportionate effect on children. 
If the regulatory action meets both criteria, the Agency must evaluate 
the environmental health or safety effects of the planned rule on 
children, and explain why the planned regulation is preferable to other 
potentially effective and reasonably feasible alternatives considered 
by the Agency.
    EPA interprets E.O. 13045 as applying only to those regulatory 
actions that are based on health or safety risks, such that the 
analysis required under section 5-501 of the Order has the potential to 
influence the regulation. This action is not subject to E.O. 13045 
because it partly approves a state rule implementing a Federal 
standard.

D. Executive Order 13084

    Under E.O. 13084, EPA may not issue a regulation that is not 
required by statute, that significantly affects or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of Indian tribal governments ``to provide meaningful 
and timely input in the development of regulatory policies on matters 
that significantly or uniquely affect their communities.''
    This proposed rule does not significantly or uniquely affect the 
communities of Indian tribal governments. Today's proposed rule does 
not create a mandate on tribal governments. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply to 
this proposed rule.

E. Regulatory Flexibility

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions.
    This proposed approval and conditional approval rule will not have 
a significant impact on a substantial number of small entities because 
SIP approvals under section 110 and subchapter I, part D of the Clean 
Air Act do not create any new requirements, but simply approve 
requirements that the state is already imposing. Therefore, because the 
Federal SIP approval does not create any new requirements, I certify 
that this proposed action will not have a significant economic impact 
on a substantial number of small entities. Moreover, due to the nature 
of the Federal-State relationship under the Clean Air Act, preparation 
of a flexibility analysis would constitute Federal inquiry into the 
economic reasonableness of state action. The

[[Page 40807]]

Clean Air Act forbids EPA to base its actions concerning SIPs on such 
grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).
    If the proposed conditional approval is converted to a disapproval 
under section 110(k), based on the state's failure to meet the 
commitment, it will not affect any existing state requirements 
applicable to small entities. Federal disapproval of a state submittal 
does not affect its state-enforceability. Moreover, EPA's proposed 
disapproval of a submittal will not have a significant impact on a 
substantial number of small entities because the disapproval action 
only affects seven industrial sources of air pollution: Cenex, Conoco, 
Inc., Exxon Company, USA, Montana Power Company, Montana Sulphur & 
Chemical Company, Western Sugar Company, and Yellowstone Energy Limited 
Partnership. Only a limited number of sources are impacted by this 
action. Therefore, I certify that this action will not have a 
significant economic impact on a substantial number of small entities.

F. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to state, local, or tribal governments in the aggregate; or to 
the private sector, of $100 million or more. Under section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the approval action being proposed does not 
include a Federal mandate that may result in estimated costs of $100 
million or more to either state, local, or tribal governments in the 
aggregate, or to the private sector. Accordingly, no budgetary impact 
statement is required.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Reporting and recordkeeping requirements, Sulfur oxides.

    Authority: 42 U.S.C. 7401 et seq.

    Dated: July 20, 1999.
Jack W. McGraw,
Acting Regional Administrator, Region VIII.

    40 CFR Part 52, subpart BB of chapter I, title 40 is proposed to be 
amended as follows:

PART 52--[AMENDED]

    1. The authority citation for Part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--General Provisions

    2. Section 52.32 is amended by designating the existing text as (a) 
and by adding paragraph (b) to read as follows:


Sec. 52.32  Sanctions following findings of SIP inadequacy.

* * * * *
    (b) By letter dated March 4, 1993, pursuant to sections 
110(a)(2)(H) and 110(k)(5) of the Clean Air Act, 42 U.S.C. 
7410(a)(2)(H) and 7410(k)(5), EPA informed the Governor of Montana that 
the Sulfur Dioxide State Implementation Plan (SIP) for the Billings-
Laurel area was substantially inadequate to attain and maintain the 
sulfur dioxide National Ambient Air Quality Standards (NAAQS) and 
called for the State of Montana to revise the SIP as necessary to 
assure attainment and maintenance of the sulfur dioxide NAAQS. The 
Governor of Montana submitted sulfur dioxide SIP revisions for the 
Billings-Laurel area to EPA on September 6, 1995, August 27, 1996, 
April 2, 1997, and July 29, 1998. EPA partially disapproved these SIP 
revisions on [Effective date of disapproval] (see 40 CFR 
52.1370(c)(47)). By virtue of EPA's partial disapproval, sanctions, as 
described in section 179(b) of the Clean Air Act, 42 U.S.C. 7509(b), 
apply to the Billings-Laurel area pursuant to section 179(a)(3)(B) of 
the Clean Air Act, 42 U.S.C. 7509(a)(3)(B). These sanctions shall apply 
to the Billings-Laurel area in the sequence set forth in 
Sec. 52.31(d)(1) and in accordance with the terms of Sec. 52.31. 
[Effective date of disapproval] shall be deemed the date of the finding 
described in Secs. 52.31(d) and (e).

Subpart BB--Montana

    3. Section 52.1370 is amended by adding paragraph (c)(47) To read 
as follows:


Sec. 52.1370  Identification of plan

* * * * *
    (c) * * *
    (47) The Governor of Montana submitted sulfur dioxide SIP revisions 
for Billings/Laurel on September 6, 1995, August 27, 1996, April 2, 
1997 and July 29, 1998. On March 24, 1999, the Governor submitted a 
commitment to revise the SIP.
    (i) Incorporation by Reference
    (A) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Cenex Harvest 
Cooperatives including the stipulation and exhibit A and attachments to 
the stipulation except for paragraph 20 of the stipulation and the 
portions of sections 3(B)(2) and 4 (D), of exhibit A that apply to 
flares.
    (B) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Conoco including the 
stipulation and exhibit A and attachments to the stipulation, except 
for paragraph 20 of the stipulation.
    (C) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Exxon including the 
stipulation and exhibit A and attachments to the stipulation, except 
for paragraphs 1 and 22 of the stipulation, and the portions of 
sections 3(E)(4) and 4(E) of exhibit A that apply to flares.
    (D) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Montana Power Company 
including the stipulation and exhibit A and attachments to the 
stipulation, except for paragraph 20 of the stipulation.
    (E) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Montana Sulphur & 
Chemical Company including the stipulation and exhibit A and 
attachments to the stipulation, except for paragraphs 1, 2 and 22 of 
the stipulation, and sections 3(A)(1)(a) and (b), 3(A)(3), and 3(A)(4) 
of exhibit A.
    (F) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Western Sugar Company 
including the stipulation and exhibit A and attachment to the 
stipulation,

[[Page 40808]]

except for paragraph 20 of the stipulation.
    (G) Board Order issued on June 12, 1998, by the Montana Board of 
Environmental Review adopting and incorporating the stipulation of the 
Montana Department of Environmental Quality and Yellowstone Energy 
Limited Partnership including the stipulation and exhibit A and 
attachments to the stipulation except for paragraph 20 of the 
stipulation.
    (ii) Additional Material.
    (A) All portions of the September 6, 1995 Billings/Laurel SO2 SIP 
submittal other than the stipulations and exhibit A's and attachments 
to the stipulations.
    (B) All portions of the August 27, 1996 Billings/Laurel SO2 SIP 
submittal other than the stipulations and exhibit A's and attachments 
to the stipulations.
    (C) All portions of the April 2, 1997 Billings/Laurel SO2 SIP 
submittal other than the stipulations and exhibit A's and attachments 
to the stipulations.
    (D) All portions of the July 29, 1998 Billings/Laurel SO2 SIP 
submittal that are not covered in section 52.1370(c)(47) above other 
than the stipulations and exhibit A's and attachments to the 
stipulations.
    (E) April 28, 1997 letter from Mark Simonich, Director, Montana 
Department of Environmental Quality, to Richard R. Long, Director, Air 
Program, EPA Region VIII.
    (F) January 30, 1998 letter from Mark Simonich, Director, Montana 
Department of Environmental Quality to Richard R. Long, Director, Air 
Program, EPA Region VIII.
    (G) August 11, 1998 letter from Mark Simonich, Director, Montana 
Department of Environmental Quality, to Kerrigan G. Clough, Assistant 
Regional Administrator, EPA Region VIII.
    (H) September 3, 1998 letter from Mark Simonich, Director, Montana 
Department of Environmental Quality, to Richard R. Long, Director, Air 
Program, EPA Region VIII.
    (I) March 24, 1999 commitment letter from Marc Racicot, Governor of 
Montana, to William Yellowtail, EPA Regional Administrator.
    (J) May 20, 1999 letter from Mark Simonich, Director, Montana 
Department of Environmental Quality, to Richard R. Long, Director, Air 
and Radiation Program, EPA Region VIII.

[FR Doc. 99-19270 Filed 7-27-99; 8:45 am]
BILLING CODE 6560-50-P